Sustainable Development Risks and Risk Management: A Systemic View from the Positions of Economics and Law (Advances in Science, Technology & Innovation) 3031342550, 9783031342554

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Advances in Science, Technology & Innovation  IEREK Interdisciplinary Series for Sustainable Development

Elena G. Popkova  Editor

Sustainable Development Risks and Risk Management A Systemic View from the Positions of Economics and Law

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.

Elena G. Popkova Editor

Sustainable Development Risks and Risk Management A Systemic View from the Positions of Economics and Law

Editor Elena G. Popkova RUDN University Moscow, Russia

ISSN 2522-8714 ISSN 2522-8722 (electronic) Advances in Science, Technology & Innovation ISBN 978-3-031-34255-4 ISBN 978-3-031-34256-1 (eBook) https://doi.org/10.1007/978-3-031-34256-1 # The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 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

Preface

The Decade of Action is a unique moment in recent human history when, thanks to the systemic role and coordinating support of the United Nations (UN), the countries of the world are united by the common ideals articulated in the Sustainable Development Goals (SDGs). Like any period, the Decade of Action is accompanied by specific complexities of socio-economic development. It is advisable to consider these complexities from a risk perspective because this would allow us to consider the hazards themselves and assess the scale of their expected negative consequences, as well as the probability of their occurrence. It is first necessary to note the risks of digitalization, innovation, and high-tech in the economy. Innovative activities are always associated with sufficiently high risks. The risks are particularly high when implementing digitalization and high technology because many of them represent disruptive innovations. From the perspective of sustainable development, the considered risks are related to the return on investment, adaptation to change, and environmental consequences. High-tech manufacturing involves a high degree of automation, a common example of which is the combination of robots, the Internet of Things, and artificial intelligence. This organizational model carries social risks (unemployment, filling gaps in digital competencies, changing the nature and content of labor, and reequipment of working places) and environmental risks (increased energy consumption and increased overall consumption of resources. The prospect of risk management is related to the stimulation of responsible innovation. The most significant risks also include the risks of the COVID-19 pandemic and crisis and their impact on economic growth. The COVID-19 pandemic poses one of the greatest threats to humanity. It sent an important message to the global community to strengthen individual and joint efforts to combat the viral threat. The modernization of the health care system, and the pharmaceutical industry, in particular, plays a significant role in this process. Nevertheless, the COVID-19 pandemic was not limited to the health sector and had serious consequences at the level of the economy and the law. Legal regulation plays an important role in COVID-19 risk management by enshrining the roles of legal actors in combating the viral threat: self-isolation, social distancing, vaccination, etc. The COVID-19 crisis broke out in the economy amidst lockdowns due to the COVID-19 pandemic. This crisis caused an unusually deep decline in global GDP in 2020. The echoes of this recession can still be heard in the world economic system. COVID-19 economic crisis management involves supporting industries and creating and developing autonomous smart industries available for continuous operation while fully complying with pandemic restrictions and any other requirements in the event of future epidemics and pandemics. It is also important to pay attention to the risks of state regulation of the economy and regulatory mechanisms of risk management. Social institutions are evolving under the influence of the SDGs, which have gained widespread support. This is clearly reflected in the development of society and the knowledge economy. The changes in economic systems occurring in the Decade of Action should be regulated by law. This requires changes at the level of national and international law to support risk management.

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It is also advisable to consider international trade risks and customs regulations in support of risk management. The beginning of the twenty-first century can be considered the heyday of globalization due to the outstanding efforts of the World Trade Organization (WTO). In the Decade of Action, it is more appropriate to talk about moderate and flexible globalization with a predominance of regionalization processes—local integration at the level of the regions of the world. The risks arise regardless of the approach to regulating international trade at the country level. Involvement in the processes of international economic integration is associated with the risks of partial loss of autonomy in decision-making at the macroeconomic level. Simultaneously, the rejection of foreign trade integration threatens the risk of reducing the efficiency of the economic system due to the insufficient use of the mechanism of the international division of labor. Since all countries are closely interconnected and form a single network of global trade, it is unacceptable to exclude any country from the global value chains because this threatens the stability of the entire global economy. It is necessary to pay special attention to the risks of implementing the SDGs and risk management based on corporate social responsibility. In this case, it is necessary to consider the meso- (regions within the country) and micro- (individual enterprises) level of sustainable development of current economic systems. At these levels, there are important activities to implement the SDGs and integrate them into corporate and local strategies; sustainability reporting is published. The risks here are related to the inconsistency of the SDGs and the complexity of their comprehensive implementation. Corporate social responsibility, in particular, taking the form of social entrepreneurship, is a promising tool for risk management. This tool is actively used in practice. The specifics of sustainability risks and risk management by industry should also be considered. Each industry faces specific sustainability risks that require unique approaches to risk management, which should generally be as flexible and adaptive as possible. Increased tensions and imbalances in global markets in recent years have greatly increased industry risks. Social adaptation and labor market risks in the context of economic and legal changes should be identified among the main risks. The phenomena of economic recession, combined with the pandemic constraints of social interactions and intensive automation, cause unprecedentedly high risks of unemployment. In this case, risk management is related to developing professional and higher education and lifelong learning. In addition to this, sustainable development is fundamentally changing people’s daily lives. The SDGs are integrated into the local culture and form a new worldview of responsible communities and sustainable territories (cities, villages, and regions). This causes risks of social adaptation to the Decade of Action. Commitment to the public interest, a willingness to support circular economic practices, and a shared culture of sustainable development require profound transformations of social institutions. Traditional institutions are replaced by more progressive, advanced ones that offer the broadest possible opportunities for the implementation of the SDGs, their public monitoring, and their control. The prospects for risk management of social adaptation for the Decade of Action are related to the development and dissemination of new methodological approaches in pedagogy, as well as new practices of self-regulation at the community level. Decentralization is a promising path to risk management that many countries are following. Last but not least, the key risks of sustainable development, which must be considered in the Decade of Action, are financial and economic risks. In this case, we should note the risks of business losses, budget deficits, and public debt accumulation. Management of these risks lies in the field of fiscal regulation, which must consider the specifics of each economic system. In this case, it is also essential to consider the investment risks. Private investment is the foundation of economic growth. Therefore, it is critical to ensure the freedom of international investment flow and highly effective investment risk management.

Preface

Preface

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The problem is that the existing literature separately addresses various sustainability risks. To address the problem, this book aims to systematically study sustainability risks and risk management perspectives in the Decade of Action. This goal is achieved in eight parts of the book. The first section highlights the risks of digitalization, innovation, and high tech in the economy. The second part examines the risks of the COVID-19 pandemic and crisis and their impact on economic growth. The third part covers risks of state regulation of the economy and regulatory mechanisms of risk management. The fourth part focuses on international trade risks and customs regulations in support of risk management. The fifth part discusses the risks of implementing the SDGs and risk management based on corporate social responsibility. The sixth part describes the peculiarities of sustainability risks and risk management by industry. The seventh part identifies social adaptation risks and labor market risks under conditions of economic and legal change. The final, eighth part reflects financial and economic risks and risk management perspectives in support of sustainable development. The uniqueness and novelty of this book, as well as its contribution to the literature, lies in the comprehensive treatment of sustainability risks, thanks to which the book identifies and demonstrates the systemic relationship of these risks. The book opens the possibility of developing approaches to the fullest and most effective risk management in the Decade of Action. The practical relevance of this book stems from the fact that it describes and discusses practical experience in detail and accompanies the theoretical material with numerous case studies, including cases and frameworks with extensive coverage of international best practices. The primary audience for this book is scholars engaged in studying sustainability. In this book, they will find a systemic scientific perspective on sustainability risks and risk management perspectives in the Decade of Action. An additional audience for the book is practitioners, who will find practical advice on managing sustainability risks at all levels of the economy. With its wealth of examples from different countries, the book is also of interest to a wide international audience. Moscow, Russia

Elena G. Popkova

Contents

Part I

Theoretical Foundations of Risk Management in Support of Sustainable Development

SDGs Risks and Digital Approach to Managing Them . . . . . . . . . . . . . . . . . . . . . . Elena G. Popkova Macroeconomic Risks of Sustainable Development: Features of Developed and Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ainagul T. Mamyralieva, Baktygul A. Ashiralieva, Igor V. Denisov, and Anna K. Lutoshkina The Contribution of Digital Technologies to Management of Sustainable Development Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Igor V. Denisov, Olga V. Fokina, Olesya A. Ryzhova, Nadezhda A. Inkova, and Olesya K. Pakhomova

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Innovative Development of Kazakhstan as an Experience for the Economic Development of Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Olga V. Klimovets

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Reducing the Digital Divide as a Mechanism to Ensure Sustainable Economic and Social Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Natalia A. Povetkina, Anna S. Zueva, and Anna A. Kopina

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The Role of Blockchain in Public Administration in the Field of Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marina V. Galkina, Maksim Yu. Shamrin, and Lolita M. Saydulaeva

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Trends in Dispute Resolution in E-Commerce: China’s Experience . . . . . . . . . . . . Elena P. Ermakova and Sergey Sh. Shakirov Transformation of Settlement Relations in the Context of Industry 4.0: Conversion of Blockchain Club’s Crypto-codes into Legitimate Analogues . . . . . . Denis E. Matytsin, Agnessa O. Inshakova, and Alexander I. Goncharov Possibilities and Threats of Digitalization for Society . . . . . . . . . . . . . . . . . . . . . . . Nataliya A. Tovma, Irina A. Maslova, Liudmila V. Popova, Ashirgul K. Seidildayeva, and Inna V. Mishchenko

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Integration into Global Value Chains as a Driver of High Technology Exports Development in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Natallia S. Shalupayeva, Halina A. Shmarlouskaya, and Aleksandr N. Leonovich

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Regional Aspects of Ensuring Security and Development of Entrepreneurship in the Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elena V. Karanina, Asya V. Kotandzhyan, and Yuri Y. Domenko

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Contents

Strategic Management of Innovation-Oriented Activities of Business Structures, Taking into Account Noospheric and Sustainable Development Approaches Transformed on an Advanced Methodological Basis . . . . . . . . . . . . . . . . . . . . . . . Galina N. May-Boroda, Alexander P. Gorbunov, Natalya N. Gorbunova, and Miroslava A. Gorbunova

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The Methodology of “Smart City” in the Experience of Theoretical Organization of Knowledge of Contemporary Urban Epistemology . . . . . . . . . . . . . . . . . . . . . . . . . Oleg A. Vereshchagin, Vera A. Kolosova, and Natalya E. Belova

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Assessment of the Risks of Transition from a Global Pandemic Crisis to a Model of Long-Term Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Anastasia A. Yussuf, Elena A. Okunkova, Julia V. Ioda, Murat A. Tleptserukov, and Larisa M. Butova Remote Justice Procedures During the COVID-19 Pandemic in the Russian Federation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Julia S. Karpova and Olga I. Miroshnichenko National Health as a Condition and Factor of Economic Growth: Legal Aspects . . Vlada Yu Lukyanova The COVID-19 Pandemic and Crisis as a Source of Global Risks to Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Irina S. Zinovyeva, Elena A. Barmina, Larisa V. Shabaltina, and Svetlana Yu. Soboleva

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The Economic Impact of COVID-19 on the Development of Tour Operating in the Siberian and Far Eastern Federal Districts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Evgeny V. Konyshev and Anna K. Lutoshkina Methodological Approaches to Risk Assessment of the Implementation of State Programs and their State Financing in the Field of Healthcare in the Regions of Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Nadezhda I. Yashina, Sergey N. Yashin, Ekaterina S. Malysheva, Oksana I. Kashina, and Nataliya N. Pronchatova-Rubtsova The Impact of COVID-19 on the Economies of Petroleum-Exporting Middle Eastern Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Vladimir Z. Chaplyuk, Fakhraddin N. Akhmedov, Mhd Shaker Zeitoun, and Ahmad S. Al Humssi The Impact of COVID-19 on Global Socio-Economic Spheres and International Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Maria V. Petrovskaya, Vladimir Z. Chaplyuk, Md. Nazmul Hossain, Milana M. -S. Abueva, and Ahmad S. Al Humssi Development of the Pharmaceutical Industry: Current Trends and the Role of China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Na Li and Natalia A. Volgina Optimization Diagnosis of Spasm of Accommodation among Students in the Osh State University . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Zhazgul B. Imetova, Dzhamiliya U. Kadyrkulova, Maksatbek E. Satyvaldiev, Kuttubek T. Abylov, and Baktyiar O. Abdurakhmanov Electronic Evidence in the Civil Proceedings: The Experience of the Republic of Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Irina A. Gronic

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Reshaping the Institution of Liability in International Space Law . . . . . . . . . . . . . 141 Agnessa O. Inshakova, Ruslan A. Konygin, and Alexandr I. Travnikov International Legal Challenges to Biotechnological Products . . . . . . . . . . . . . . . . . 145 Agnessa O. Inshakova, Anastasia M. Otrashevskaya, and Alexander M. Solntsev Problems and Prospects for the Use of Electronic (Digital) Evidence in Arbitration Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Daria S. Proskurina New Forms of Dispute Resolution in the Russian Federation as a Reflection of Innovation in Law Enforcement: Platform Justice . . . . . . . . . . . . . . . . . . . . . . . . . 159 Elena P. Ermakova and Zarina K. Erbutaeva Legal Assessment of Objective and Subjective Justifiable Defense Signs . . . . . . . . . 163 Victor I. Dineka, Mikhail V. Denisenko, Oleg V. Popov, Mikhail A. Gorbunov, and Irina V. Veretentseva Specifics of Preventive Visit as a Type of Preventive Measures (Using the Example of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Tatiana F. Timofeeva, Viktor V. Timofeev, Olga V. Zakharchenko, Tatyana N. Kozhina, and Anton K. Kuznetsov Comparison of Legal Regulation of Expense Accounting in the Russian Federation and the People’s Republic of China . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Anatolii V. Kholkin, Vladimir D. Lubofeev, Alina V. Ovcharenko, Anastasia A. Sozinova, and Lubov N. Shapkina Protecting Social Rights in an Era of Economic Change . . . . . . . . . . . . . . . . . . . . 185 Agnessa O. Inshakova, Denis A. Gugunskiy, Maria A. Simonova, and Alexander M. Solntsev Mechanisms of the Legal Management of Sustainable Development Risks at the Macro Level of Economic Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Tatyana S. Bobkova, Elena A. Bratukhina, Irina N. Bachurinskaya, and Sergey E. Akopov A Universal Human Rights Mechanism for the Protection or Revision of the Institution of Family in an Era of Economic Change . . . . . . . . . . . . . . . . . . . . . . . 189 Aslan Kh. Abashidze and Vladimir M. Filippov Trends of the Russian Labor Legislation Development in the Era of Great Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 Tatyana Yu. Korshunova, Oksana V. Motsnaya, and Larisa V. Seregina Impact of Customs and Tariff Regulation on Economic Security . . . . . . . . . . . . . . 203 Aleksei M. Sorokin, Alexander L. Chupin, Olga A. Dmitrieva, Sergei P. Zhdanov, and Alex I. Ukhanov Customs and Tariff Regulation of the Eurasian Economic Union in the Context of New Geo-economic Realities and Challenges to Industry . . . . . . . . . . . . . . . . . . 209 Anna Yu. Pak, Alexander B. Malikhin, David A. Amatunyan, and Margarita V. Shlenskaya On the Indicative Approach to Assessing International Trade within the EAEU . . 215 Tatyana M. Vorotyntseva

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Contents

Russian-Azerbaijani Bilateral Trade Cooperation in Terms of Eurasian Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Inna V. Andronova, Elshad Y. Mammadov, Arina A. Tinkova, and Kirill A. Andronov A Feasibility Study of China-EAEU Free Trade Agreement . . . . . . . . . . . . . . . . . . 227 Natalia V. Yurova and Jiahui Yao Dollarization in Ecuador, Economic Growth, Trade Balance, Impact on Ecuadorian Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 Segundo Elías Yancha Tuasa Integration Processes and the Economy of Peru: Current Trends . . . . . . . . . . . . . 239 Inna V. Lazanyuk and Montaser H. Abou Zahr Diaz The Impact of Socio-economic Inequality on the Relations Between the European Union Countries and the Assessment of Strategic Areas for its Reduction . . . . . . . 245 Inna V. Andronova, Tatiana S. Malakhova, Diana M. Madiyarova, and Dina B. Kanagatova Development of the Institute of Customs Representatives in the Republic of Kazakhstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 Mikail B. Khudzhatov, Valentin Yu. Vakhrushev, Milyausha K. Khalilova, and Shakizada U. Niyazbekova The Impact and Role of Foreign Direct Investment in the Modernization of China’s Automotive Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 Natalia A. Volgina and Yuanlong Wang Economic Cooperation of the Levant Countries: Main Directions and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 Lyudmila V. Shkvarya, Vasily I. Rusakovich, and Malik A. Abou Zahr Diaz EAEU and BRI: Current Prospects of Mutual Cooperation . . . . . . . . . . . . . . . . . . 269 Irina N. Belova, Elena A. Egorycheva, and Filipp D. Belov Assessing the Economic Positions of the European Union Countries in the Context of Transforming Foreign Economic Relations and Implementing a New Industrial Strategy for Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 Tatiana S. Malakhova, Diana M. Madiyarova, Lubomír Civín, and Dinara S. Kadyrbekova Geo-Economic Interests of the Republic of Turkey in the Republic of Uzbekistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Inna V. Andronova and Ivan O. Khabarov Rethinking the Potential of the International Transport Corridor “North-South” in Sustaining Russia’s Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 Egor V. Pak and Petr O. Korolev Prospects of the Khorgos Free Economic Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 Diana M. Madiyarova and Wang Yong Part II

Applied Aspects of Risk Management in Support of Sustainable Development

Philosophy of System Sustainable Development of Economic Systems from the Position of the Noospheric Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Anastasia A. Sozinova, Nadezhda K. Savelyeva, Lyudmila A. Shvachkina, and Valentina I. Rodionova

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Philosophy of Sustainable Development Risks Through the Lens of the SDGs . . . . 305 Anastasia A. Sozinova, Maria P. Tikhonovskova, Karina A. Chernitsova, and Victoria V. Kotlyarova Sociology of Sustainable Development: The Role of Responsible Communities in the Achievement of the SDGs and the Advantages for the Quality of Life . . . . . . . . . . 309 Nurgul K. Atabekova, Svetlana A. Tikhonovskova, and Elena S. Petrenko Social Aspects of the Sustainable Development Risks: Social Support for Responsible Innovations vs. “Human Factor” as a Barrier on the Path of Their Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 Aibek Y. Kunnazarov, Juliana А. Kitsai, Elena A. Lysova, and Lyudmila M. Lisina Matrix of Risks for Sustainable Development and the Universal Mechanisms of Risk Management of Implementing the SDGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Ainura A. Adieva, Aleksandra V. Ryattel, Pavel A. Kalinin, and Olga A. Surkova Risks of Region’s Sustainable Development: A Systemic View from the Position of Society, Economy and Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 Talgat T. Talantbekov, Alexey V. Tolmachev, Dmitry A. Loginov, and Natalya G. Balibardina The Risks of Implementing and Managing the SDGs in the Company’s Activities: A Case Study by the Example of the Largest Companies of Russia . . . . . . . . . . . . 333 Olga A. Pecherskaya, Nadezhda V. Palesheva, Marina N. Kiseleva, and Larisa V. Shabaltina The Importance of the International Policy of Globalisation and Open Economy to the Reduction of the Global Risks for Sustainable Development . . . . . . . . . . . . . 339 Anastasia A. Sozinova, Nadezhda K. Savelyeva, Elena V. Patsyuk, and Natalia M. Fomenko The Role of the State Management Institutions in the Reduction of the MacroEconomic Risks for Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 Ainura A. Adieva, Andrey V. Kuklin, Irina V. Milchik, and Elena V. Kizil Innovations as the Basis for Managing the Region’s Sustainable Development Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 Almash A. Kutmanbekova, Alexey V. Tolmachev, Nataliay V. Ketko, and Elena S. Akopova Corporate Social Responsibility to Manage the Risks to the Achievement of the SDGs in the Entrepreneurial Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 Nurgul K. Atabekova, Galina A. Dorofeeva, Anastasia A. Sozinova, and Nadezhda K. Savelyeva Social Entrepreneurship as an Institute of Sustainable Development Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 Juliana А. Kitsai, Svetlana E. Karpushova, Elena S. Petrenko, and Anastasia I. Smetanina Modern Issues in Sustainability Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Tatyana Y. Druzhilovskaya, Emilia S. Druzhilovskaya, Tatyana V. Stozharova, and Nikolai A. Dobrolyubov Assessment of the Strain-Stress Distribution in the Vicinity Conceding Mountainside’s Scarp Using Mathematical Modeling . . . . . . . . . . . . . . . . . . . . . . . 375 Jamila A. Baialieva, Kulnara J. Ismailova, Kalysbek K. Abdygaziev, Ainura K. Zhamangapova, and Ainura T. Dyikanova

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Marketing Mix of a Responsible Company to Manage the Risks to the Achievement of the SDGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 Alexey V. Tolmachev, Aleksandr Kh. Shigapov, Aleksandr A. Krutilin, and Marina N. Kiseleva The Role of Personnel Training in Higher Education and HRM to Reduce the Sustainable Development Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 Konstantin V. Vodenko, Anna N. Liberovskaya, Elena N. Makarenko, and Platon A. Lifanov Values of Modern Organizations and Social Responsibility of Scientific Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 Anzhela M. Salogub and Marina A. Arselgova Regulatory and Legal Provision of Sustainable Development Risk Management in the Agro-industrial Complex: An Overview of International Experience . . . . . . 397 Meerimai Z. Karbekova, Ilimkan J. Atybaeva, Aleksei A. Nabokikh, and Elena V. Sofiina Theoretical Basis of Risk Management in Manufacturing Enterprises . . . . . . . . . . 403 Shuhrat Z. Muxitdinov, Nazgul A. Shakirova, Gulvira A. Turdubayeva, Guliza Sh. Osmonova, and Gulzar A. Asanova Problems of Increasing Investment Attractiveness of the Agro-industrial Complex of the Kyrgyz Republic and Ways to Solve Them . . . . . . . . . . . . . . . . . . 407 Abdimitalip A. Baimuratov, Marat T. Zikiraev, Aselya S. Kayipkulova, Tynara E. Kerimbaeva, and Fatima S. Parpieva The Impact of Sharp Fluctuations in Global Crude Petroleum Prices on the World Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 Maria V. Petrovskaya, Fakhraddin N. Akhmedov, Mhd Shaker Zeitoun, and Ahmad S. Al Humssi International Production in the Russian Automotive Industry . . . . . . . . . . . . . . . . 419 Siranush L. Usnyan Regression Analysis of the Development Indicators of Light Industry in Kyrgyzstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 Abdurashit G. Nizamiev, Zharkynai T. Shermatova, Zhannat K. Rayimberdieva, Elmurat A. Obdunov, and Rasuljon I. Mamajanov Development of the Competitiveness of Integrated Sectors of the Economy in the Market of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 Azizbek M. Tashbaev, Bektur S. Raimberdiev, and Dinara A. Osmonalieva Research on the Behavior of Online Consumers in the Global Internet Space . . . . 435 Elizaveta E. Tarasova, Elena I. Makrinova, Elena V. Matuzenko, Irina V. Rozdolskaya, and Lyubov V. Teplova Creation of a SaaS-System for Image Analysis in Agriculture Using Artificial Intelligence Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Aleksey F. Rogachev, Ilya S. Belousov, and Elena V. Melikhova Development of the Recycling Sector and Its Marketing Support as a Factor in the Sustainable Development of the Forestry Sector of the Economy . . . . . . . . . . . 447 Marina A. Muravieva, Olga G. Nazarova, Olga V. Gudkova, Valentina V. Silaeva, and Inna A. Tachkova

Contents

Contents

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The Influence of Macroeconomic Factors on the Art Market (on the Example of International Sales of the MacDougall’s Auction House) . . . . . . . . . . . . . . . . . . . . 453 Arseniy G. Morgunov and Irina N. Belova Transformation of the Structure of the Cross-Border Agri-Food Value Chain . . . . 459 Natalia A. Volgina and Vladimir S. Severiukhin Middle East Energy Policy Transformation: Saudi Case . . . . . . . . . . . . . . . . . . . . 463 Andrey N. Surkov and Alexander G. Simonov Reflections of Gender Inequality in Language and Culture . . . . . . . . . . . . . . . . . . 469 Gulipa A. Madmarova, Anargul N. Gaipova, Inmaculada Velasco Gómez, Elmira A. Karabekova, and Zamira M. Sabiralieva Integral Assessment of Labor Potential of the Region in the Age of Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 Natalia V. Lazareva, Victor A. Fursov, Elena N. Kushch, Ovsanna M. Dzhavadova, and Liliy V. Semenova The Model for Assessing the Professional Competencies of Employees in Today’s Labor Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 Alena A. Veselko, Tatiana V. Gerbina, Maria A. Chavykina, and Gaurav Sharma Influence of Parents on Formation of National Consciousness of a Teenager . . . . . 485 Akchach O. Zholdosheva, Venera K. Sabirova, Cholpon R. Ryspaeva, Recep S. Sadikova, and Asel O. Abylkasymova On the Etymology of the Kyrgyz Names of Dwelling and Family from the Point of View of the Theory of Linguo-Regional Unity of the Altai and Chinese Peoples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 Kapar Z. Zulpukarov, Semetei M. Amiraliev, Aida K. Zulpukarova, Gulzat B. Aipova, and Maratbek O. Abdykulov Labor Migrants in the Economy of GCC Countries: History, Modernity, Problems, and Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Fatima Ahmadi Titulature in the Text of the Epic “Manas” and “Babur’s Notes” as a Source of Information About the Social Institutions of the Central Asian Region . . . . . . . . . 505 Siuita R. Abdykadyrova, Gulipa A. Madmarova, Zamira M. Sabiralieva, Gulzat J. Bolotakunova, and Chynarkan A. Gaparova Monohexamethylenetetramine Zinc Iodide Complex Compound for Cotton Growth and Development Stimulation: Advantages in the Labor Market . . . . . . . 511 Dilbara T. Altybaeva, Mairam D. Abdullaeva, Nargiza M. Abduraupova, Zhypargul D. Abdullaeva, and Mahira R. Mirzaeva Assessment of Social Security of the Population of Federal Districts . . . . . . . . . . . . 515 Nadezhda K. Savelyeva and Victoria A. Saidakova On the Reflexes of the Ancient Root “But” [Foot] in Nostratic Languages . . . . . . . 521 Kapar Z. Zulpukarov and Semetei M. Amiraliev Social Unemployment Insurance Systems in China and Russia: Comparative Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 Nadezda V. Gamulinskaya, Anastasia A. Sozinova, Veronika E. Garkovenko, and Natalia N. Zubareva

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Instrumental Competencies of Linguists in an Undergraduate Degree . . . . . . . . . . 535 Seidanakhan A. Alimbaeva, Orunbai M. Suleimanov, Totukan T. Dyikanbaeva, Gulnara S. Baitikova, and Ozgonbai A. Moldojanov Ethnonyms as Concepts of Foreign Culture in the Text of a Fiction . . . . . . . . . . . . 539 Gulipa A. Madmarova, Rakhat K. Ormokeeva, Mavliuda B. Rozykova, Kanykey R. Boronova, Gulmira A. Imasheva, and Gulmira A. Madmarova Challenges Affecting Listening Comprehension in Professionally-Oriented English and the Strategies for Improvement (Railway Engineering) . . . . . . . . . . . . 543 Yulia S. Kholmanskikh and Inessa Yu. Bogatyreva Translation of Structures with Social and Grammatical Gender in the English Language (Based on Feature Film Scripts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 Murad A. Ibragimov Humanistic Philosophical Foundations of Social Work . . . . . . . . . . . . . . . . . . . . . . 555 Omurzak S. Akmatov Quantitative Tools for Corpus Analysis of the Semantics of “Sustainable” in Contemporary English . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561 Oxana V. Goncharova, Svetlana A. Khaleeva, Lola A. Kaufova, and Irina S. Stroeva Social Partnership as a Mechanism for Coordinating the Goals and Values of Subjects of Social Interaction in Modern Russian Conditions . . . . . . . . . . . . . . . . . 565 Anzhela M. Salogub, Alexander S. Starovoitov, Marina V. Chistova, Nina V. Demina, and Ivan K. Galan Cognitive Approach to the Analysis of Pregnant Women’s Identity . . . . . . . . . . . . 571 Irina A. Kolinichenko, Arsen G. Avsharov, Svetlana A. Nikulina, Lubov B. Voronkina, and Maria V. Voloshina Diasporic Factor of Sustainable Development of the Middle East States (the Case of Jordan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 Alihan M. Israilov and Denis A. Mirgorod The Concept of Linguistic Education in the Systematic Implementation of the Goals of Sustainable Human Development: The Noospheric Paradigm . . . . . . . . . 581 Leokadiya V. Vitkovskaya, Igor F. Golovchenko, Inna V. Kicheva, Olga K. Strashkova, and Viacheslav I. Shulzhenko Changes in the System of Education Financing in the Republic of Kazakhstan to Achieve the Sustainable Development Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 Maslikhat Zamirbekkyzy, Zhanat M. Bulakbay, and Shakizada U. Niyazbekova International Tax Transparency: Incorporating the Provisions of International Agreements in Russia’s Financial Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 Ekaterina A. Tsepova Characterization of the Current State of Central Bank Digital Currencies from a Global Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 Maria V. Shildina Tax Regulation in Special Economic Zones of the Russian Federation in the Context of Sanction Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 Irina V. Gashenko, Yulia S. Zima, Maria N. Kilevnik, and Sergei Yu. Levandovskii Financial Strategy of Managing Risks to the Sustainable Development of a Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 Aziza B. Karbekova, Nurbek K. Musakulov, Alexey V. Tolmachev, and Ekaterina A. Berezina

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Analysis of Mortgage Lending in Conditions of Instability . . . . . . . . . . . . . . . . . . . 615 Shakizada U. Niyazbekova, Galina S. Margatskaya, Yelena S. Patashkova, Oksana A. Stepannikova, and Baldyrgan K. Jazykbayeva Benchmark Models and Technologies in Marketing Management . . . . . . . . . . . . . 619 Irina A. Shumakova, Elena S. Danilova, Ludmila V. Zaikina, and Suj Bjao Analyzing the Circular Economy in the Context of “Green Finance” . . . . . . . . . . . 625 Yevgeniy V. Varavin, Marina V. Kozlova, Anna S. Komarova, Michail Yu. Makovetskij, and Sergey N. Markov Contribution of Higher Education to the Development of a Trusting Environment Between Participants in Tax Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631 Irina V. Gashenko, Yulia S. Zima, Maria N. Kilevnik, and Sergei Yu. Levandovskii Prospects for Anticipatory Management of Sustainability Risks in the Decade of Action (Conclusion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 Elena G. Popkova

Part I Theoretical Foundations of Risk Management in Support of Sustainable Development

SDGs Risks and Digital Approach to Managing Them Elena G. Popkova

Abstract

Keywords

This paper aims to identify sustainable development risks in the Decade of Action and develop a digital approach to managing them. Using regression analysis, the author carries out a factor analysis of the implementation of the SDGs in 2021 and identifies sustainable development risks in the Decade of Action. A forecast of sustainable development in the Decade of Action under the influence of risks is made. For this purpose, the author applies horizontal analysis to study the dynamics of changes in the sustainable development risks in the Decade of Action based on relevant data for 2020–2021 and projected data for 2022–2027. A forecast of sustainable development in the Decade of Action under the influence of risks is made. The author compiles a sustainable development risk profile for the Decade of Action and proposes forwardlooking risk management measures based on digitalization. The author concludes that crises, slow economic growth, and national budget deficits are sustainable development risks that threaten the implementation of the SDGs in the Decade of Action. The proposed digital approach to managing risks of sustainable development in the Decade of Action, which provides a targeted impact on each of the risks of sustainable development in the Decade of Action, solves the identified problem. The theoretical significance of the author’s conclusions is related to the fact that they formed a clear understanding of the risks of sustainable development. The practical relevance of the digital approach to managing risks of sustainable development is related to the fact that it will make it possible to realize the fullest potential of sustainable development of the world economic system in the Decade of Action.

Risks · Sustainable development · Sustainable Development Goals (SDGs) · Decade of Action · Digital approach · Risk management

E. G. Popkova (✉) RUDN University, Moscow, Russia

JEL Codes

D81 · G32 · Q01 · O31 · O32 · O33 · O38

1

Introduction

Sustainable development is a contemporary concept of balancing social, environmental, and economic interests in developing economic systems. This concept has gained a serious international institutional basis with the adoption of the 17 Sustainable Development Goals (SDGs) under the auspices of the United Nations (UN). In 2020, the phase of active implementation of the SDGs, dubbed the Decade of Action, began, as all the planned results must be achieved in 10 years—until 2030. In this connection, the identification of sustainable development risks in the Decade of Action that pose a threat to the implementation of the SDGs, as well as the identification of prospects for managing these risks, is of great relevance. Risks are potential barriers to sustainable development that hinder the implementation of the SDGs. Without considering risks, the road map for sustainable development in the Decade for Action is incomplete, hampering its implementation. The problem of risk has become even more acute in the Decade of Action, as the world economic system has entered the downward phase of the long wave of the economic cycle since 2020. The increased risk component of economic activity is a characteristic feature of this phase. The problem is that the increased risks hinder the potential for sustainable

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_1

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E. G. Popkova

development of the world economic system in the Decade of Action. The practical experience of individual countries, noted in the works of Nasiri et al. (2022), Rosamartina et al. (2022), and Xia et al. (2022), testifies to the significant contribution of digital technologies to the sustainable development of their economic systems. Nevertheless, the available publications reveal this contribution only in a fragmented way, noting the benefits of isolated technologies and only for certain SDGs. In this regard, there is a need for a systemic view of the prospects for using digital technology to manage sustainable development risks. Based on the above, this research aims to identify sustainable development risks in the Decade of Action and develop a digital approach to managing them.

2

Literature Review

This research draws on the science of sustainable development. A content analysis of the existing literature highlighted two potential factors of sustainable development risks. The first potential factor includes crises and slow economic growth. The COVID-19 pandemic and crisis caused a recession in the world economy in 2020. Not having recovered from it in 2021 due to periodic lockdowns in 2022, the world economic system faced a worldwide energy crisis and disruption of global value chains due to tightening international economic sanctions. This has put considerable pressure on green initiatives worldwide. This factor is indicated in the works of Arribas-Ibar et al. (2021), Bendell (2022), Geng et al. (2022), and Koliopoulos et al. (2022). The second potential risk factor is the deficit in national budgets. To maintain socio-economic stability, governments worldwide are forced to increase state budget expenditures at a time when revenue generation opportunities are limited. This can lead to a reduction in funding for sustainable development and, therefore, requires attention and management. This factor is noted in the works of Canelli et al. (2022), Chien et al. (2022), Manzilati and Prestianawati (2022), Popkova et al. (2019), and Popkova and Sergi (2021). The literature review showed that the described factors of sustainable development risks are mostly elaborated at the level of basic science, while their actual impact on the implementation of the SDGs in practice is underdeveloped and remains uncertain. This is a gap in the literature. The need to fill the identified gap is due to the fact that the lack of a clear understanding of the risks of sustainable development hinders the development of a scientific approach to managing these risks, which jeopardizes the success of the Decade of Action. The insufficient evidence base does not allow us to assess the risks of sustainable development. Nevertheless, the accumulated scientific knowledge allows us to formulate

the hypothesis of this research, which is that crises and slow economic growth, as well as the deficit of public budgets of countries, represent risks for sustainable development in the Decade of Action. To fill this gap and test the hypothesis, this research conducts a factor analysis of sustainable development in the Decade of Action, making it possible to assess the nature and strength of the influence of assumed risk factors on the implementation of the SDGs.

3

Materials and Method

To obtain the most reliable results, this research uses a quantitative-qualitative methodology in accordance with a system approach. The study is conducted in two stages. The first step identifies sustainable development risks in the Decade of Action. A factor analysis of the implementation of the SDGs in 2021 is conducted. The method of regression analysis is used to model the dependence of the index of sustainable development ( y), calculated by UNDP (UNDP, 2022), on potential risk factors: gross domestic product in constant prices (x1) and the state budget balance (as the difference between income and expenditures, x2) based on the statistics from the International Monetary Fund (2022). The research model is as follows: y = a þ b1  x1 þ b2  x2

ð1Þ

The reliability of the regression model is evaluated using Fisher’s F-criterion and the multiple correlation coefficient. The second step is to make a forecast of sustainable development in the Decade of Action under the influence of risks. Using the method of horizontal analysis, the author studies the dynamics of changes in the factors of sustainable development risks in the Decade of Action based on actual data for 2020–2021 and forecast data (forecast of the International Monetary Fund, 2022) for 2022–2027. Based on the obtained regression model (1), a forecast of sustainable development in the Decade of Action is made under the influence of risks. The empirical basis for this research is presented in the Mendeley Data public repository (Popkova, 2022). The research sample included 144 countries with different income levels and geographic locations. These include 19 countries in Eastern Europe and Central Asia (13.19%), 20 countries in East and South Asia (13.89%), 20 countries in LAC (13.89%), 13 countries in MENA (9.03%), two countries in Oceania (1.39%), 35 countries in OECD (24.31%), and 35 countries in Sub-Saharan Africa (24.31%). The third phase of the research develops a digital approach to managing sustainable development risks in the Decade of Action. A qualitative interpretation of the quantitative results is used to build a risk profile of sustainable development in

SDGs Risks and Digital Approach to Managing Them

5

the Decade of Action and propose forward-looking risk management measures based on digitalization.

4

Results

4.1

Sustainable Development Risks in the Decade of Action

To determine the impact of potential risk factors on sustainable development by regression analysis, the author conducted a factor analysis of the index of sustainable development in 2021. As a result, the following econometric model was obtained: y = 65:5179 þ 0:5641 x1 þ 0:4078 x2

ð2Þ

According to the obtained model (2), when the economic growth rate accelerates by 1% per year, the sustainable development index increases by 0.5641 points. An increase in the state budget balance by 1% of GDP achieves an increase in the sustainable development index of 0.4078 points. To test the reliability of model (2), let us turn to the detailed results of the regression analysis (Table 1). According to Table 1, the standard error was relatively small and amounted to 13.7495. The resulting t-statistics was 2.4013 for factor variable x1 and 1.4755 for factor variable x2. The significance of F was 0.0267. The observed value of F was 3.7160. For 144 observations and 2 factor variables (k1 = 2; k2 = 144–2–1 = 141), the tabulated F at the 0.05 significance level was 3.07. Since the observed F exceeded the tabulated F (3.7160 > 3.07), model (2) is reliable at a given significance level of 0.05. Considering the obtained multiple correlation coefficient, the change in the sustainable development index by 22.38% is explained by the change in the studied factor variables. At

the level of individual regions of the world, higher values of correlation coefficients were obtained. Thus, in the MENA countries, the correlation of the sustainable development index with the rate of economic growth was 53.93%; in East and South Asia, the correlation of the sustainable development index with the state budget balance was 79.79%. This also confirms the reliability of model (2).

4.2

Forecast of Sustainable Development in the Decade of Action Under the Influence of Risks

To determine the future impact on the index of sustainable development of selected factor variables with a proven impact, the author used the method of horizontal analysis to study the dynamics of changes in the risk factors of sustainable development in the Decade of Action based on relevant data for 2020–2021 and forecast data (International Monetary Fund, 2022) for 2022–2027. The obtained results are shown in Fig. 1. As shown in Fig. 1, according to the forecast of the International Monetary Fund (2022), the rate of economic growth in the world economy in 2027 will be at a level of 3.39%. The state budget balance in 2027 will average 1.86% of GDP worldwide. By substituting the expected (most likely) values of the factor variables in the model (2), a forecast of sustainable development in the Decade of Action under the influence of risks is made (Fig. 2). As shown in Fig. 2, the forecast shows that the Decade of Action (by 2027) will see a 33.31% decrease in economic growth compared to 2021 and a 59.74% increase in the state budget balance compared to 2021. Because of these circumstances, the Sustainability Index will increase by 0.26%: from 66.50 points in 2021 to 66.67 points in 2027. This indicates the serious impact of the identified risk factors,

Table 1 Regression analysis of the dependence of the index of sustainable development on risk factors Regression statistics Multiple R Standard error Observations Variance analysis Regression Balance Total Parameters of the regression model Constant Gross domestic product in constant prices, % change State budget balance, % of GDP Source: Calculated and compiled by the author

0.2238 13.7495 144 df 2 141 143

SS 1405.0021 26655.7175 28060.7196

MS 702.5011 189.0476

F 3.7160

Significance of F 0.0267

Coefficients 65.5179 0.5641 0.4078

Standard error 2.0334 0.2349 0.2764

t-statistics 32.2208 2.4013 1.4755

P-value 0.0000 0.0176 0.1423

Lower 95% 61.4980 0.0997 -0.1386

Upper 95% 69.5378 1.0285 0.9543

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E. G. Popkova

Fig. 1 The dynamics of sustainable development risks in the Decade of Action. Source Calculated and compiled by the authors based on the materials of the International Monetary Fund (2022)

Gross domestic product in constant prices, % change 8.00 6.00 4.00

State budget balance, % of GDP

50.00 -31.71 6.18 -7.81 -5.95 -4.68 0.05 5.65 0.00 3.86 4.10 3.78 3.55 3.393.39 -50.00

-215.90

-5.00

For the development of the risk profile of sustainable development in the Decade of Action, the authors carried out a qualitative analysis of the quantitative results (Table 2). As shown in Table 2, the following sustainable development risks are highlighted in the Decade of Action:

5

-35.00

-6.45

-40.00

Value

Annual growth, %

Conclusion

Thus, the research filled the gap in the literature and proved the hypothesis put forward. The research results suggest that crises and slow economic growth, as well as government budget deficits, are risk factors for sustainable development in the Decade of Action. The forecast (based on the materials of the International Monetary Fund (2022)) indicates the serious influence of the identified risk factors, according to which the Sustainable Development Index in 2027 may remain at the level of 2021 due to the prolonged crises, the

• The risk of reduced opportunities for economic growth and development. To reduce this risk, it is recommended to develop Industry 4.0 and maximize its potential to act as a growth vector for the digital economy; • The risk of accepting higher social and environmental costs of economic growth to accelerate it. To manage this risk, the proliferation of responsible digital technologies that reduce the social and environmental 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 -10.00

-30.00

-34.62

-6.00 -7.00

-25.00

-23.51 -25.77

costs of economic growth, such as smart climate-resilient technologies, is proposed; • The risk of a sustainability financing gap. It is advisable to manage this risk through the development of digital green finance (e.g., green blockchain); • The risk of reduced solvent demand for responsible business products. To reduce this risk, the development of electronic green value chains, which will increase transparency and reduce the cost of responsible business products, is proposed to stimulate demand growth.

Digital Approach to Sustainable Development Risk Management in the Decade of Action

Fig. 2 Forecast of sustainable development in the Decade of Action under the influence of risks. Source: Calculated and developed by the author

-4.22

Annual growth, %

putting the implementation of the SDGs in the Decade of Action at risk of failure. This underscores the need to manage the identified sustainable development risks in the Decade of Action.

4.3

-10.00

-1.92 -1.86 -15.00 -2.40 -2.18 -2.04-5.64 -3.07 -9.13 -20.00 -3.13 -6.45

-3.00

-150.00

-250.00

Value

-5.00

-4.00

-200.00

-6.00 -4.88

-1.00

-100.00 0.00

-4.00

0.00

-2.00

2.00

-2.00

0.00

66.50

0.26

10.00 66.67

0.00

-10.00 -20.00

-33.31

-30.00 -40.00

5.08

3.39

-59.74 -4.63

-50.00

-1.86

Gross domestic product in State budget balance, % of 2022 SDG Index Score constant prices, % change GDP Value in 2021

Value in 2027 Increase in the value in 2027 compared to 2021, %.

-60.00 -70.00

SDGs Risks and Digital Approach to Managing Them

7

Table 2 The risk profile of sustainable development in the Decade of Action and risk management measures based on digitalization Factors of sustainable development risks Crises and slow economic growth

Deficits of state budgets of countries

Sustainable development risks The risk of reduced opportunities for economic growth and development The risk of accepting higher social and environmental costs of economic growth to accelerate it The risk of a financing gap for sustainable development The risk of reduced solvent demand for the products of a responsible business

Risk management measures based on digitalization Industry 4.0 as a growth vector for the digital economy The spread of responsible digital technologies that reduce the social and environmental costs of economic growth The development of digital green finance The development of electronic green value chains

Source: Developed by the authors

slow pace of economic growth, and the deficit of state budgets of the countries worldwide. The proposed digital approach to sustainable development risk management in the Decade of Action, which provides a targeted impact on each of the risks of sustainable development in the Decade of Action, will help solve the identified problem. The author’s approach involves the comprehensive implementation of the following risk management measures for sustainable development in the Decade of Action with the support of digitalization: (1) the development of Industry 4.0 and the fullest disclosure of its potential to act as a growth vector for the digital economy; (2) the spread of responsible digital technologies that reduce the social and environmental costs of economic growth; (3) the development of digital green finance; (4) the development of electronic green value chains. The contribution of this research to the literature consists of an in-depth exploration of sustainable development risks at the empirical level of research. The theoretical significance of the author’s conclusions is related to the fact that they formed a clear understanding of the risks of sustainable development and proposed a scientific approach to managing these risks. The practical significance of the author’s recommendations is that the proposed digital approach to managing sustainable development risk allows unlocking the fullest potential of the SDGs and ensuring the fullest realization of the sustainable development potential of the world economic system in the Decade of Action.

References Arribas-Ibar, M., Nylund, P. A., & Brem, A. (2021). The risk of dissolution of sustainable innovation ecosystems in times of crisis: The electric vehicle during the COVID-19 pandemic. Sustainability, 13(3), 1319., 1–14. https://doi.org/10.3390/su13031319 Bendell, J. (2022). Replacing sustainable development: Potential frameworks for international cooperation in an era of increasing crises and disasters. Sustainability, 14(13), 8185. https://doi.org/10. 3390/su14138185 Canelli, R., Fontana, G., Realfonzo, R., & Veronese Passarella, M. (2022). Is the Italian government debt sustainable? Scenarios

after the COVID-19 shock. Cambridge Journal of Economics, 46(3), 581–587. https://doi.org/10.1093/cje/beac014 Chien, F., Chau, K. Y., Aldeehani, T. M., Huy, P. Q., Tan, L. P., & Mohsin, M. (2022). Does external debt as a new determinants of fiscal policy influence sustainable economic growth: implications after COVID-19. Economic Change and Restructuring, 55(3), 1717–1737. https://doi.org/10.1007/s10644-021-09365-1 Geng, J., Haq, S. U., Abbas, J., Ye, H., Shahbaz, P., Abbas, A., et al. (2022). Survival in pandemic times: Managing energy efficiency, food diversity, and sustainable practices of nutrient intake amid COVID-19 crisis. Frontiers in Environmental Science, 10, 945774. https://doi.org/10.3389/fenvs.2022.945774 International Monetary Fund. (2022). World Economic Outlook Database, April 2022. Accessed September 8, 2022, from https:// www.imf.org/en/Publications/WEO/weo-database/2022/April Koliopoulos, T., Papakonstantinou, D., Ciarkowska, K., Antonkiewicz, J., Gambus, F., Mebarek-Oudina, F., et al. (2022). Green designs in hydraulics—Construction infrastructures for safe agricultural tourism and sustainable sports tourism facilities mitigating risks of tourism in crisis at post COVID-19 era. In J. V. d Carvalho, P. Liberato, & A. Peña (Eds.), Advances in tourism, technology and systems (pp. 37–47). Springer. https://doi.org/10.1007/978981-16-9701-2_4 Manzilati, A., & Prestianawati, S. A. (2022). Informal financing or debt traps: Are the UN sustainable development goals being met in emerging economies? Review of International Business and Strategy, 32(1), 132–145. https://doi.org/10.1108/RIBS-01-2021-0011 Nasiri, M., Saunila, M., Rantala, T., & Ukko, J. (2022). Sustainable innovation among small businesses: The role of digital orientation, the external environment, and company characteristics. Sustainable Development, 30(4), 703–712. https://doi.org/10.1002/sd.2267 Popkova, E. G. (2022). Data Set: Sustainable development risks in the decade of action. Mendeley Data, V1. https://doi.org/10.17632/ 97s3bzjj6s.1 Popkova, E. G., Fetisova, O. V., Zabaznova, T. A., & Alferova, T. V. (2019). The modern global financial system: Social risks vs. technological risks. In E. Popkova (Ed.), The future of the global financial system: Downfall or harmony (pp. 1013–1019). Springer. https://doi.org/10.1007/978-3-030-00102-5_107 Popkova, E. G., & Sergi, B. S. (2021). Dataset modelling of the financial risk management of social entrepreneurship in emerging economies. Risks, 9(12), 211. https://doi.org/10.3390/risks9120211 Rosamartina, S., Giustina, S., Domenico, D. F., Pasquale, D. V., & Angeloantonio, R. (2022). Digital reputation and firm performance: The moderating role of firm orientation towards sustainable development goals (SDGs). Journal of Business Research, 152, 315–325. https://doi.org/10.1016/j.jbusres.2022.07.025 UNDP. (2022). Sustainable development report 2022. From crisis to sustainable development: The SDGs as roadmap to 2030 and beyond. Accessed September 8, 2022, from https://www.sdgindex. org/reports/sustainable-development-report-2022/

8 Xia, H., Liu, Z., Efremochkina, M., Liu, X., & Lin, C. (2022). Study on city digital twin technologies for sustainable smart city design: A review and bibliometric analysis of geographic information system

E. G. Popkova and building information modeling integration. Sustainable Cities and Society, 84, 104009. https://doi.org/10.1016/j.scs.2022.104009

Macroeconomic Risks of Sustainable Development: Features of Developed and Developing Countries Ainagul T. Mamyralieva , Baktygul A. Ashiralieva and Anna K. Lutoshkina

, Igor V. Denisov

,

Abstract

Keywords

The purpose of the work is to systematize the main types and features of macroeconomic risks of sustainable development in the conditions of developed and developing countries. Design/methodology/approach The article uses the following research methods: system approach, comparative method, functional factor analysis, and framework approach. Findings The study showed that at the present stage of implementation of the concept of sustainable development, the same structure of some risks has formed, which is characteristic of both developed and developing countries (debt (or credit) risks, event risks, risks of unpredictable and unforeseen situations). At the same time, developing countries, due to the peculiarities of historical, cultural, and economic development, additionally demonstrate risks typical to their specifics, which, in turn, reduce the effectiveness of achieving sustainable development goals. Originality/value The scientific novelty of this study is due to the development of a theoretical basis for the categorization and characterization of macroeconomic risks that affect the sustainable development of developed and developing countries.

Macroeconomic risks · Sustainable development · Developed and developing countries · Features of the national economy · Debt category (category of credit risks) and event category of risks · Associated risks · Dependence

A. T. Mamyralieva (✉) · B. A. Ashiralieva Jalal-Abad State University, Jalal-Abad, Kyrgyzstan I. V. Denisov Plekhanov Russian University of Economics, Moscow, Russia Moscow Metropolitan Governance Yury Luzhkov University, Moscow, Russia A. K. Lutoshkina Vyatka State University, Kirov, Russia e-mail: [email protected]

JEL Codes

O11 · O47 · Q01 · Q56 · P41 · P44

1

Introduction

At the present stage of development, humanity is at the peak of demographic growth, but the growing needs of the population are not able to satisfy even accelerated economic growth. This reality leads to the impoverishment of millions of people and the depletion of the planet’s resources. The answer to this was a new paradigm of socio-economic development, formed taking into account environmental constraints, called “sustainable development”. It was based on the results of the analysis of the causes of catastrophic degradation of the natural environment on the scale of the biosphere and the search for ways to overcome threats to the environment and human health. It is advisable to understand the new paradigm of sustainable development not only in the context of changing the relationship between man and nature in order to expand opportunities for economic growth but also as a coordinated global strategy for the survival of mankind, focusing on the preservation and restoration of the environment. The concept of sustainable development is becoming a priority for both developed and developing countries of the world. The latter, despite the rather difficult internal economic and socio-political situation, takes care of future development, including making decisions on the implementation

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_2

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A. T. Mamyralieva et al.

of optimization paths in the environmental, economic and social spheres in the long term. Ensuring the goals of sustainable development set at the national level is possible in the case of a comprehensive consideration of macroeconomic risks that have different manifestations and characteristics for developing and developed countries, which makes this study relevant. The purpose of the study is to systematize the main types and features of macroeconomic risks of sustainable development in the conditions of developed and developing countries. The implementation of this goal involves the solution of the following tasks: assessment of the main approaches to identifying risks in this category; systematization of risks of this type within the framework of the functioning of developed and developing states.

2

Materials and Method

The solution to these tasks was carried out taking into account the main provisions of scientific research in this area. Among the scientific works that became the conceptual basis of this article, the following articles should be mentioned (Dedu et al., 2021; Fajgelbaum & Khandelwal, 2021; Katina et al., 2018; Mahul & Signer, 2020; Nurlanova & Rasulev, 2018; Pescaroli & Alexander, 2018; Ranger et al., 2021; Schweizer & Renn, 2019; Zscheischler et al., 2018). Although the issues of the impact of macroeconomic risks were studied at the level of individual states, it can be noted that this issue is disclosed in fragments. At the current stage of scientific thought, there is a need to create a comprehensive systematization of these risks, taking into account modern development trends. Research within a certain direction is associated with the use of certain methods. Based on a systematic approach, the main positions of scientists in the context of the problem under study are formulated. The application of the comparative method involves comparing differences in the nature and structure of risks identified for the sustainable development of developed and developing countries. In the context of a benchmark for functional factor analysis, an assessment of risks as factors (threats) of sustainable development was carried out. The use of this method is theoretical since the paper considers the results of the analysis of the structure and level of the impact of risks obtained on its basis in the framework of scientific research. Also, the theoretical and methodological foundations of the framework approach were used, which is used to establish the general boundaries of the influence of the risks of the category under study. The research materials include scientific articles of the authors in the framework of the study of this issue, concerning the current state of sustainable development of

states; analytical data regarding the substantiation of the impact of risks in the macroeconomic sphere.

3

Results

Let us consider the main scientific approaches to determining the risks of the studied category in the context of the functioning of both developed and developing countries. The first scientific approach involves the classification of risks in the macroeconomic sphere within the framework of the debt category (category of credit risks) and the event category. It should be noted that the emphasis on the debt category is predominantly always present since countries of various types have debt obligations to external and domestic investors. Concerning the focus on the event sign, we mean macroeconomic events that cause the risk of reducing the sustainability of development of each of the goals of the state (social, environmental and economic sectors). It can be pointed out that the noted category of credit risks also directly relates to the category of debt risks since it is associated with the risk of default on credit funds (accumulation of non-performing loans). In the context of this scientific approach, it is necessary to note the study (Katina et al., 2018). The authors classify the types of threats (risks) to the sustainable development of states using the example of the United States, namely: (1) Debt risks: the country’s public debt. According to the researchers, the growth of this indicator can be considered a key threat to the US national economy. Its growth is due to unpredictable costs that will negatively affect the provision of the current needs of future generations when most of the tax revenues will be used to cover debts. At the same time, external debt will either grow, or it will be necessary to abandon some state projects in the social and environmental spheres. Figure 1 shows the dynamics of the US government debt for 2015–2021. In addition to the emphasis on the fact that the growth of public debt will lead to a reduction in spending on social and environmental programs, the authors point out that domestic investment and trade will also be reduced due to the need to allocate funds to reduce public debt. (2) Event risks. In the work of (Katina et al., 2018), it is indicated that the category of these risks in relation to the United States includes: – A trade war with China. According to studies (Economictimes, 2022), as part of this confrontation, China suffered a loss of $550 billion (from import tariffs). In 2020 and 2021, goods from China to the US entered the US markets under the guise of goods originating in Vietnam or the Philippines. In general, since there are no official statistics on the impact of this risk on the state of

USD billion

Macroeconomic Risks of Sustainable Development: Features of Developed and Developing. . . 35000 30000 25000 20000 15000 10000 5000 0

11

27747 19976

2016

21974

20492

2017

2018

29617

23201

2019

2020

2021

Fig. 1 Dynamics of the US public debt for 2015–2021. Source: Compiled by the author based on materials of (Fred, 2022)

the US economy, we can only talk about reputational the risks of the state, which previously acted as a leader in the global integration of markets, and in 2018 changed its traditions by starting a trade war with China (Fajgelbaum & Khandelwal, 2021); – Constant participation in the fight against international terrorism, which affects the growth of government spending. According to analytical data (Brown, 2021), over the past twenty years, the United States has spent $8 trillion on measures to combat international terrorism (Brown, 2021); – Brexit is a trade risk with the UK. Given the long-term trade ties between the two countries, there is a threat of their decline due to the decline in economic activity in the UK during this transition process, which is exacerbated by political confrontation in this country and the EU as a whole. We can state that the risks formulated by Katina et al. (2018) quite comprehensively identify two categories of threats to the sustainable development of the United States. Although the authors did not disclose quantitative indicators of the impact of these factors (risks) on the future and current state of the components of sustainable development of the state, we can note the validity of the key areas of threats in this area. According to the provisions of the first scientific approach, it is necessary to single out the work of (Dedu et al., 2021). According to the position of the author, credit risks (or risks of default on credit funds, risks accumulation of non-performing loans) negatively affect both the economic component of sustainable development (the state of the credit market) and the social and environmental components. The impact on the last two components of sustainable development is because, due to a decrease in working capital, the banking sector in the social sphere, in the field of greening. The authors identify this category of risks as a priority in the researched direction, confirming their arguments with the dynamics of the development of bank lending in Romania. The second scientific approach concerns the emphasis on the need to classify, taking into account the possibility of forming complex relationships between risks caused by

unforeseen or unpredictable events, including pandemics, climate change, natural disasters, wars, and others (focus on mutual risks). Despite the difficulty of predicting such risks, they develop with a certain cyclicity, which can be determined in the context of the framework approach. In the context of the second scientific approach, we can consider the risk categories presented in the study (Ranger et al., 2021). Researchers study the development and types of risks associated with unforeseen or unpredictable events. The authors use the approach as an example New Zealand governments have shown that the risk of a pandemic should be included in macroeconomic risks as a priority, one that, with mutual influence on the emergence of other risks of this category (increased unemployment, decreasing effective demand for goods (services), inflation, rising prices for energy resources, reduction in innovation, credit risks and public debt) affects the emergence of an additional level of threats to sustainable development. Researchers note that the mutual influence of the risks of unforeseen events (situations) causes about 50% of the additional negative impact. Therefore, their timely accounting can ensure levelling and reducing the negative impact on the components of sustainable development. The authors also assess the impact of this category of risks on the example of the approaches of the governments of countries in Asia, Africa and South America in the context of taking into account the threats of climate shocks and natural disasters. The paper shows measures to regulate the negative consequences of the occurrence of such risks, if they are predicted using the theory of cyclicity, namely, it is indicated that it is possible to predict the costs of restoring housing, infrastructure, and treating the victims. That is, the provision of the social component of the sustainable development of states is taken into account. The study (Zscheischler et al., 2018) points out that the threats of climate change and natural disasters belong to the category of macroeconomic risks, and they need to be assessed in the complex of influence on other risks of this type. According to the authors, a separate study of the economic impact of risks in this category will not protect against the emergence of complex threats arising from the mutual influence of risks among themselves. The emphasis of

12

researchers on the need to measure the impact of complex risks using multifactorial models that allow taking into account their mutual influence deserves attention. Pescaroli and Alexander (2018) put forward the types of complex risks associated with natural disasters, defined in the framework of the provisions of the second scientific approach. The authors point to such types of complex macroeconomic risks in the framework of the sustainable development of states, namely: the risk of natural disasters and environmental changes, the risk of destruction of critical infrastructure, the risk of unemployment, the risk of GDP reduction due to the destruction of infrastructure, stopping the development of some industries. Noteworthy are the positions of the authors of the article (Mahul & Signer, 2020) regarding the main types of macroeconomic risks of sustainable development associated with natural disasters, formulated in the framework of the second scientific approach. The results of the study were obtained on the example of combating this type of risk in developing countries of the Pacific region against the background of the fight against the consequences of the COVID-19 pandemic. Researchers point out that this category of risks should include: risks of natural disasters during other negative events affecting the state of sustainable development (pandemics, wars); risks of lack of accounting in the budget state expenditure items to cover the costs of these negative events and/or natural disasters; destruction of infrastructure; decline in GDP; increased needs of the healthcare system for treatment, recovery of citizens who have suffered as a result of the impact of these risks. The article of (Schweizer & Renn, 2019) defined a list of macroeconomic risks of the category under study, formulated in the context of a focus on natural disasters (highlighted by researchers on the example of these events in Germany). According to the authors’ approach, risks of this type should include risks of natural disasters that affect the emergence of associated types of risks; associated risks of infrastructure vulnerabilities (main and additional); associated risks of stopping and reducing production; associated risks of additional damages affecting the reduction of the state’s GDP. The third approach involves the allocation of macroeconomic risks of sustainable development associated with the characteristics of the national economy. This approach is more typical for developing countries that have not achieved significant integration into the global economic space due to these features. In the context of the third approach, we can note the classification of risks of this type, developed in the article (Nurlanova & Rasulev, 2018). The presented classification takes into account the peculiarities of risks in the conditions of Kazakhstan. The authors indicate that these risks should include: risks of lack of dynamics structures of the national economy based on the predominance of the extractive

A. T. Mamyralieva et al.

industry in the context of the price fluctuations on world markets for raw materials; risks of uneven development of regions affecting the growth of subsidized spending; risks of the influence of the shadow economy on insufficiently stable financing of the main directions of sustainable development (in the context of social and economic components).

4

Discussion

Based on the analysis of the formulated approaches, we present a systematization of risks of this category in the conditions of developed and developing countries. The risks, typical for developed and developing countries, include risks of the debt category (category of credit risks) and event category, risks of mutual influence caused by unforeseen or unpredictable events (pandemics, natural disasters, environmental changes, wars, terrorist attacks). Among the risks of this category, which exist mainly in the conditions of developing countries, one can name risks to the national economy; risks of production and trade dependence on countries that are the main creditors or suppliers of products (goods) of critical imports. An example of the last category of risks is the high dependence of the production and trade sectors of Belarus on the Russian economy. This risk arose due to the long-term mutual influence of the economies of the two countries, and the lack of a high level of introduction of innovative technologies in the main industries in Belarus, which leads to the production and sale of the low value-added products, which are purchased as part of partnerships with Russia.

5

Conclusions

The study of the types and characteristics of the risks of the category under study allows us to conclude that it is necessary to predict them using the most optimal methods and tools. Transformations in various spheres of society (economic, environmental and social) occur within a certain cycle. Given the above, a reference to this phenomenon can become the starting point for predicting the impact of macroeconomic risks on achieving the main goals of sustainable development of states. Timely identification and levelling of the effect of the impact of risks of this category can become an incentive for the implementation of the established goals of sustainable development, revitalization of the economy, and all spheres of the country’s life. As an example, we can cite the experience of China, which, despite the negative impact of the pandemic and other risks, is demonstrating rapid economic growth, lifting social development standards, and achieving certain results in the field of greening. In this case, we can

Macroeconomic Risks of Sustainable Development: Features of Developed and Developing. . .

state a high level of predictability of the occurrence, impact of risks and timely adoption of measures to reduce their impact.

References Brown. (2021). Costs of the 20-year war on terror: $8 trillion and 900,000 deaths. Accessed June 12, 2022, from https:// economictimes.indiatimes.com/news/international/business/chinastrade-war-with-us-resulted-in-loss-of-usd-550-billion-report/ articleshow/90025687.cms Dedu, V., Nițescu, D.-C., & Cristea, M.-A. (2021). The impact of macroeconomic, social and governance factors on the sustainability and well-being of the economic environment and the robustness of the banking system. Sustainability, 13, 5713. Accessed June 12, 2022, from https://www.mdpi.com/2071-1050/13/10/5713#cite Economictimes. (2022). China’s trade war with US resulted in loss of USD 550 billion: Report. Accessed June 12, 2022, from https:// economictimes.indiatimes.com/news/international/business/chinastrade-war-with-us-resulted-in-loss-of-usd-550-billion-report/ articleshow/90025687.cms Fajgelbaum, P. D., & Khandelwal, A. K. (2021). The economic impacts of the US-China trade war. NBER: National Bureau of Economic Research. Accessed June 12, 2022, from https://policycommons.net/ artifacts/1820127/the-economic-impacts-of-the-us-china-trade-war/ 2558147/

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Fred. (2022). Federal debt: Total public debt. Accessed June 12, 2022, from https://fred.stlouisfed.org/series/GFDEBTN Katina, J., Sansyzbayeva, G., Guliyeva, A., & Rzayeva, U. (2018). Threats to the country’s sustainable economic development: A case study. Journal of Security and Sustainability Issues, 8(1), 113–122. Mahul, O., & Signer, B. (2020). The perfect storm: How to prepare against climate risk and disaster shocks in the time of COVID-19. One Earth, 2, 500–502. Nurlanova, N. K., & Rasulev, A. F. (2018). General trends and main risks for sustainable development in Central Asian countries. Economics and Finance, 1, 15–23. Pescaroli, G., & Alexander, D. (2018). Understanding compound, interconnected, interacting, and cascading risks: A holistic framework. Risk Analysis, 38(5). Accessed June 12, 2022, from https:// policycommons.net/artifacts/1820127/the-economic-impacts-ofthe-us-china-trade-war/2558147/ Ranger, N., Mahul, O., & Monasterolo, I. (2021). Managing the financial risks of climate change and pandemics: What we know (and don’t know). One Earth (Cambridge, MA), 4(10), 1375–1385. Schweizer, P.-J., & Renn, O. (2019). Governance of systemic risks for disaster prevention and mitigation. Disaster Prevention and Management, 28, 862–874. Zscheischler, J., Westra, S., van den Hurk, B. J. J. M., Seneviratne, S. I., Ward, P. J., Pitman, A., Aghakouchak, A., Bresch, D. N., Leonard, M., Wahl, T., & Zhang, X. (2018). Future climate risk from compound events. Nature Climate Change, 8, 469–477.

The Contribution of Digital Technologies to Management of Sustainable Development Risks Igor V. Denisov , Olga V. Fokina , Olesya A. Ryzhova, Nadezhda A. Inkova, and Olesya K. Pakhomova

Abstract

JEL Codes

The paper is aimed at identifying and characterizing global trends in the development and implementation of digital technologies in the management of sustainable development risks in the context of digitalization of the economy and society. Several methods have been used in the course of research to achieve the abovementioned goal, in particular, statistical and comparative analysis. The scientific novelty of the presented research is conditioned upon the development of theoretical features of the impact of digitalization on the mitigation of risks of the main components of the UN SDGs at the level of developed countries. We have presented the characteristics of the impact of the introduction of modern digital technologies on the efficiency of projects concerned with basic risks of the UN SDGs in countries that demonstrate high indices of digitalization and sustainable development. It has been found that certain efficient development strategies can be adapted to the environment of developing countries.

D31 · L81 · O14 · Q01 · Q51 · Q53 · Q56

Keywords

Sustainable development · Risk management · Digitalization · Strategies · Partnership · Responsible production and consumption · Environmentalization

I. V. Denisov (✉) Plekhanov Russian University of Economics, Moscow, Russia Moscow Metropolitan Governance Yury Luzhkov University, Moscow, Russia O. V. Fokina Vyatka State University, Kirov, Russia e-mail: [email protected] O. A. Ryzhova · N. A. Inkova · O. K. Pakhomova Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia

1

Introduction

Developed countries in the modern context of globalization pay considerable attention to the development of the digital economy. Many states are making a gradual transition to the digital single market, implementing digital strategies in the organization of production and processes, and establishing the necessary conditions for the digitalization of national economies. The extensive impact of the technological imperative on the development of all vital processes gives reason to state that the key global universal trend—digitalization, which can significantly change all spheres of society in the future, has become increasingly progressive in recent years. Today, the introduction of digital technologies is considered to be an important driver of socioeconomic and environmental development. Challenging problems in the sphere of protection of economies from crisis phenomena, combating poverty of the population, and combating climate change, are facing each society, and require an immediate solution at the global level, which can be found through the use of new, non-conventional solutions. The risks in the abovementioned fields relating to the main categories of the SDGs can be eliminated through the introduction and use of the best possible types of digital technologies. Taking the above into account, the problem of introducing digitalization for combating sustainable development risks, defined by the topic of the paper, is topical, and it is necessary to establish and systematize the positive experience of the top companies and countries of the world that demonstrate good results in the management of sustainable development risks. The goal of this paper is to identify and characterize global trends in the development and implementation of digital technologies in the management of sustainable development

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_3

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I. V. Denisov et al.

risks in the context of digitalization of the economy and society. The following tasks have been set to achieve this goal: assessing the dependence of the dynamics of changes in the management of sustainable development risks on the dynamics of changes in the introduction of digital technologies in the top countries in terms of digitalization and the top countries in terms of implementation of the SDGs; characterizing strategies of the contribution of digital technologies to eliminating sustainable development risks.

2

Materials and Methods

The research involves the use of materials relating to the impact of digitalization on the economy, the use of strategies involved with the focus on digital technologies in the management of sustainable development, and the risks of achieving it at the level of individual states. Among the works within the framework of this range of problems, we emphasize the following: (Aasback, 2022; Bakker & Ritts, 2018; Collington, 2022; Kaur, 2021; Khan et al., 2021; Knierim et al., 2019; Kukkamalla et al., 2021; Nicholas & Wappelhorst, 2020). The analysis of the research results presented in these papers demonstrates the fragmentary nature of studies since they involve individual countries or companies. Given the above, we note the need for a comprehensive study of data on the impact of digitalization of the economy on the elimination of the risks to the UN SDGs. This research implies the use of several methods that were selected for the optimal solution of definite problems. In particular, the use of statistical analysis and comparative analysis has made it possible to identify the top countries in terms of management of sustainable development risks and the introduction of digital technologies. Further, a comparative analysis was used for determining the dynamics of changes in the management of sustainable development

risks and the introduction of digital technologies (the dynamics of changes in indices of these figures, the values of which are presented as positions in the global rankings (Cambridge University Press, 2022; IMD, 2022). It has been found that the dynamics of changes in indices of the introduction of digital technologies and management of sustainable development risks are as follows: their growth is indicative of a deterioration in their development. The generalization method was necessary for the identification of characteristics of strategies of the introduction of digital technologies into the development of the top countries in terms of digitalization focused on the SDGs risk management of states.

3

Results

We shall now analyze the impact of the dynamics of changes in the introduction of digital technologies (Digital Competitiveness Index) on the dynamics of changes in the management of sustainable development risks (Sustainable Development Index) at the level of the top states in terms of digitalization and achievement of the SDGs. It should be pointed out that the efficiency of the SDGs risk management is determined through the Sustainable Development Index, the increase in which is indicative of the increased impact of risks (presented in the provisions of (Cambridge University Press, 2022). Digital Competitiveness Index is descriptive of the level of introduction of digitalization (as shown in IMD (2022)). Table 1 presents a sample of values of the two indices under study at the level of top-20 countries. Based on the data presented, we can state that the most significant development of the two indicators under study (the first ten positions in the rankings) in 2019–2021 concerned Sweden, Denmark and Norway. The above

Table 1 The dynamics of the Digital Competitiveness Index and Sustainable Development Index for 2019–2021 Country USA Hong Kong Sweden Denmark Singapore Korea Rep. Germany Finland Belgium Norway Austria France

Digital Competitiveness Index, Rank 2019 2020 1 1 8 2 3 4 4 3 2 2 10 8 17 18 7 10 25 25 9 9 20 17 24 24

2021 1 2 3 4 5 12 18 11 26 9 16 24

Sustainable Development Index, Rank 2019 2020 35 41 n/a n/a 2 3 1 2 66 60 18 27 6 6 3 1 16 18 8 4 5 5 4 7

Source: Compiled by the authors based on (Cambridge University Press, 2022; IMD, 2022)

2021 32 n/a 2 3 76 28 4 1 5 7 6 8

The Contribution of Digital Technologies to Management of Sustainable Development Risks

testifies that the introduction of digitalization has an absolute impact on the SDGs risk management in these states. Although it cannot be claimed that the introduction of digital technologies had no impact on combating risks of major components of sustainable development in countries that demonstrated less significant results in terms of implementation of the SDGs. We shall now determine the presence of such an impact at the level of Sweden, Denmark, Norway (the top countries included in the top 10 in the global rankings based on the two indices), the USA, Germany, Finland, Belgium (an improvement in the Sustainable Development Index was noted at a high and average value of Digital Competitiveness). Table 2 shows the dynamics of changes in the two indices of countries to be assessed under study for 2019–2021. The study of obtained results (Tables 1 and 2) has shown that the efficient impact of the introduction of digital technologies (Digital Competitiveness Index) on Sustainable Development (in risk management) was noted in: – in the USA. In 2021, some risk management directions were implemented within the framework of the implementation of the following SDGs: 6 (providing the population with clean water (for the territories of the USA, and other countries), health aids and measures during the fight against the pandemic); 9 (implementation of measures for innovative development of infrastructure facilities); 11 (projects for sustainable development of particular cities); 17 (projects for partnership between the USA and other countries regarding the SDGs risk management (including with China); – in Sweden. We should take note of managements that are associated with mitigation of risks of introducing the following SDGs: 7 (projects concerned with the production of clean energy and its distribution at the domestic level for the population, commercial and public sectors); 5 (projects for the development of gender equality); – in Germany. We can identify the most efficient directions in the context of minimization of the impact of the risks of several SDGs: 7 (projects for the provision of clean and

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affordable energy (large-scale introduction of charging stations for electric vehicles) (Nicholas & Wappelhorst, 2020)); 9 (innovative development of the agricultural sector—creation and distribution of data processing and analysis applications) (Knierim et al., 2019)); – in Belgium. We shall note that the state employs a wide range of digital technologies (within a framework of Big Data, Artificial intelligence, Internet of Things) which have an impact on the SDGs risk management, in particular: 1 (projects involved with poverty alleviation); 8 (projects aimed at provision of decent employment in the fields related to digitalization (data processing operators, data collection operators—employment in the agricultural sphere, management, remote software maintenance, in the sphere of sales via digital platforms); – in Denmark. Digital technologies were used for managing the SDGs risks of social orientation, in particular: 1 and 10 (digital provision communication between government authorities at all levels with the public that made it possible to increase the speed of processing applications, providing assistance, facilitating employment which had an impact on poverty alleviation and reduction of social inequality) (Collington, 2022). The introduction of digitalization in the field of solving environmental problems involved with clean and affordable energy supply (SDG 7) could also be observed; – in Norway. Digitalization is responsible for risk mitigation within the framework of the SDGs: 1, 3, 5, 10 (projects relating to the operation of government authorities in the social sphere, their interaction, exchanges of data, communication with the population to ensure the provision of social services, interaction at the level of the state and its citizens (execution of the agreement for social support by the former) (Aasback, 2022)); 7 (projects for clean and affordable energy production and supply); 17 (publicprivate partnership projects for environmentalization, introduction of innovations into facilities of economic infrastructure, social sphere (private enterprises implement the major portion of projects for management of the state platform of social services); projects for

Table 2 The dynamics of changes in the Digital Competitiveness Index and Sustainable Development Index for 2019–2021

Country USA Sweden Denmark Germany Finland Belgium Norway

The dynamics of changes in Digital Competitiveness Index, +/-, Rank 2019–2020 2020–2021 0 0 1 -1 -1 1 1 0 3 1 0 1 0 0

The dynamics of changes in Sustainable Development Index, +/-, Rank 2019–2020 2020–2021 6 -9 1 -1 1 1 2 -2 -2 0 2 -13 -4 3

Source: Compiled by the authors based on Table 1 and (Cambridge University Press, 2022; IMD, 2022)

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I. V. Denisov et al.

partnership at the level of Norway, Denmark and Sweden in management of sustainable development risks (environmental, social and infrastructure projects, introduction of the green economy within a framework of the development of the main industrial sectors) (Khan et al., 2021). We shall now pass on to the study of characteristics of strategies of the impact of digital technologies on the elimination of sustainable development risks. It has been found that there is a technical-scientific and trading cooperation with local authorities of China in the context of the territorial introduction of digital technologies in the USA at the level of big business. Such interaction can be observed despite the trade confrontation at the level of the two states. In particular, a sizable contribution to managing risks of SDG 17 (in the field of partnership for the implementation of goals of environmentally-focused sustainable development of territories of China) is being made by IBM, an American company. This partnership is involved with the development, introduction, and administration of the information and forecasting project “Green Horizons”, dealing with the forecasting of air quality (used by more than 30 of the most polluted cities in China), by IBM. Forecasts are made up to the level of a particular street for the next 72 hours (or for the next 5–10 days). Based on the messages received, local authorities take administrative measures and make decisions in the field of limitation of the load on the streets from transport and pedestrians (Kaur, 2021). According to research materials (Bakker & Ritts, 2018), the abovementioned project was created based on digital technologies in the field of Artificial Intelligence related to the Smart Earth technology group. IBM’s focus on the stimulation of sustainable environmental development of Chinese cities is involved with the social responsibility of the company in environmentalization in places of organization of production. Its strategy can be identified as a strategy of production integration based on environmentally focused social responsibility. It has been found that major companies are the main drivers of digitalization aimed at mitigation of sustainable development risks both in Germany and in the USA. That said, the preemptive reference point for these business entities is associated with the implementation of sustainable development goals, eliminating the risks of achieving them at the domestic level. We should emphasize the activities of the BMW Group, involved with the introduction of electrification programs, and the introduction of new digital services, which help to quickly find charging stations for electric vehicles (Kukkamalla et al., 2021). The analysis has made it possible to find out that the BMW Group development strategy in terms of the introduction of digital technologies for the SDGs risk mitigation is assessed as a strategy for

energy efficiency of products. Another German company BASF makes its contribution to sustainable innovative development of the agricultural sector. In particular, digital applications for data processing and assessment regarding the management of processes in this sector (characterization of soil, weather conditions, and weather forecasts, keeping calendars for planting and treatment of plants, vegetables, fruits, livestock care, etc.) are produced, distributed and maintained (Knierim et al., 2019). It can be pointed out that the company also creates and improves digital applications based on the results of consultations or based on the experience of customer staff training (farmers, farming enterprises). Hence, we can state that the development strategy of the BASF company in this field can be identified as a strategy of growth through partnership. We have in mind continuous cooperation with customers (free training of staff (or an individual farmer) for the use of these digital applications, electronic interviewing regarding convenience, the need to improve functionality, and adaptability to various types of activities in the agricultural sector of Germany.

4

Discussion

The research has shown that the top countries in terms of the introduction of digital technologies and the SDGs risk management, as well as their key companies, focus on fairly similar directions for development. The goals are mainly identified and implemented within the following framework: 1. risk mitigation in the social sphere: ensuring the functioning of e-Government in the sphere of social security in a way that facilitates solving problems in the field of poverty alleviation; interaction of e-Government in terms of other social issues; selection of decent employment (this direction is related to the development of the economic sphere—new fields of the digital economy (Internet of Things, Big Data processing and analysis, Artificial Intelligence); 2. risk minimization in the economic sphere: establishing new conditions for the development of economic infrastructure through the introduction of digital applications, ensuring the accuracy and speed of data collection, analysis, and prediction; developing new types of activities that will provide new incentives for the increase in the output of products (services), sales of goods, increase in GDP; innovative development of infrastructure facilities (industries, factories, equipment); 3. risk mitigation in the field of the environmental sphere: projects for production and provision of clean energy, the introduction of digital projects for the development of environmentally sustainable territories; projects for partnership at the level of the state and business, groups of

The Contribution of Digital Technologies to Management of Sustainable Development Risks

states, concerned directions.

with

environmentally

focused

This being said, it can be pointed out that these countries, as well as their business entities, have no significant achievements in the field of implementation of projects involved with the SDG 12 risk management involved with responsible production and consumption (in terms of environmental component). This fact shows that since these states are the top states in terms of digitalization and sustainable development in the world, they certainly belong to the category of developed countries. Despite the declaration of goals in this direction, there is no involvement of all spheres of civic society and business, and there are no overarching strategies at the national and supranational levels in the global dimension. The adoption of strategic guidelines concerning responsible production and consumption, and their implementation based on digital technologies will enable a radical reform of approaches to the process, and resource component, and will ensure the reduction of environmental contamination at the level of individual states as well as at the global level.

5

Conclusion

The researchers have analyzed the principal directions of the introduction of digital technologies in the framework of the management of various categories of sustainable development risks through the example of countries and companies which are leading in these fields. It has been found that not all top countries in terms of digital development managed to ensure high figures of risk management in terms of fundamental components of the UN SDGs. It can be stated that the above is explained by the existence of detachment of the development of digital technologies from the conditions of economic development, management of social life and activities at the level of governments of national states. Moreover, this problem is caused by the poorly managed interaction at the level of producers of digital technologies and their consumers (the public, and business) in terms of elimination of problems with the use of digital products.

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We have examined current efficient strategies of the impact of digitalization on the minimization of sustainable development risks which are adaptable to the business environment of developing countries. The successful integration of these strategies requires consideration of all risk characteristics that should be minimized; in addition, it is necessary to accurately quantify available resources for the implementation of promising sustainable development projects.

References Aasback, A. W. (2022). Platform social work – A case study of a digital activity plan in the Norwegian Welfare and Labor Administration. Nordic Social Work Research. Accessed July 8, 2022, from https:// www.tandfonline.com/doi/full/10.1080/2156857X.2022.2045212 Bakker, К., & Ritts, М. (2018). Smart Earth: A meta-review and implications for environmental governance. Global Environmental Change, 52, 201–211. Cambridge University Press. (2022). Sustainable development report. Accessed July 8, 2022, from https://dashboards.sdgindex.org/ rankings Collington, R. (2022). Disrupting the welfare state? Digitalization and the retrenchment of public sector capacity. New Political Economy, 27(2), 312–328. IMD. (2022). World digital competitiveness ranking. Accessed July 8, 2022, from https://www.imd.org/centers/world-competitivenesscenter/rankings/world-digital-competitiveness/ Kaur, A. (2021). Large and small-scale applications of AI and ML to prevent and detect climate change: A Review. International Advanced Research Journal in Science, Engineering and Technology, 8(5), 148–156. Khan, J., Johansson, B., & Hildingsson, R. (2021). Strategies for greening the economy in three Nordic countries. Environmental Policy and Governance, 31(6), 592–604. Knierim, А., Kernecker, М., Erdle, К., Kraus, Т., Borges, F., & Wurbs, A. (2019). Smart farming technology innovations – Insights and reflections from the German Smart-AKIS hub. NJAS. Wageningen Journal of Life Sciences, 90–91. Accessed July 8, 2022, from https:// www.sciencedirect.com/science/article/pii/S157352141830232X Kukkamalla, Р. К., Bikfalvi, А., & Arbussa, А. (2021). The new BMW: Business model innovation transforms an automotive leader. Journal of Business Strategy, 42(4), 268–277. Nicholas, M., & Wappelhorst, S. (2020). Regional charging infrastructure requirements in Germany through 2030. White Paper, 10. Accessed July 8, 2022, from https://theicct.org/wp-content/uploads/ 2021/06/germany-charging-infrastructure-20201021.pdf

Innovative Development of Kazakhstan as an Experience for the Economic Development of Russia Olga V. Klimovets

Abstract

The opportunities for the growth of the Kazakh economy are currently laid in the area of digital technologies. The economy of Kazakhstan will not be able to reach a high stage of recovery and an adequate level of national competitiveness if the mechanism of its innovation activity is not fully involved. In 2017, Kazakhstan adopted the state program “Digital Kazakhstan,” the implementation of which is carried out in 2018–2022 in 5 directions. One of the directions concerns the digitalization of economic sectors, which will transform the traditional sectors of the economy of the Republic of Kazakhstan, achieve an increase in labor productivity, and increase the capitalization of enterprises. This experience is vital for the development of the Russian economy. Keywords

Transnational corporations · International business · Innovation · Efficiency of companies · Scientific and technological progress · Digital platform

JEL Codes

E24 · F22 · J24 · P51

1

Introduction

Informatization and automation are the fundamental basis for the transition of the Kazakh economy to the digital format. In 2017, Kazakhstan adopted the state program “Digital Kazakhstan,” the implementation of which is carried out in the period 2018–2022 in 5 areas (President of the Republic of O. V. Klimovets (✉) Academy of Marketing and Social Information Technologies – IMSIT, Krasnodar, Russia

Kazakhstan, 2018). One of the directions concerns the digitalization of economic sectors, which would make it possible to transform the traditional sectors of the economy of the Republic of Kazakhstan, achieve an increase in labor productivity, and increase the capitalization of enterprises. Growth opportunities for the Kazakh economy are currently embedded in the area of digital technologies. The economy of Kazakhstan will be able to reach a high stage of recovery and an appropriate level of competitiveness of the state only as a result of the activation of the mechanism of its innovative activity in all sectors of the economy. The study of the digital economy is carried out by such foreign scientists as Bukht and Hicks (2018), Brenner et al. (2019), Bauer et al. (2017), Klimovets (2021b), and Panshin (2019). A certain contribution to the study of the digital economy was made by Russian economists, including Veduta (Pritvorova et al., 2020), Avdokushin (2018), and others. Among the Kazakh economists dealing with the problems of studying the digital economy, it is necessary to mention Ageev and Smirnova (2018), Avdokushin (2018), as well as Gawer and Cusumano (2014). Most economists-researchers predict the sustainable formation of network structures and their impact on the stabilization of the economy in the context of digitalization (Harrison et al., 2018; Klimovets, 2021a; Ovchinnikova et al., 2020). The features of the formation of digital platforms and the organizational basis for managing them must form the basis for the development of digital technologies and be studied in various industries and sectors of the economy, especially in relation to industrial enterprises (Chandra & Wilkinson, 2017; Klimovets, 2016; Prokhorov & Konik, 2020). In Kazakhstan, research on the analysis and evaluation of digital technologies in the industry is just being developed. This issue, with rare exceptions, has not been practically considered through the prism of IT services (Ageev & Smirnova, 2018; Avdokushin, 2018; Belokopytova et al., 2014).

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_4

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O. V. Klimovets

Materials and Methods

During the research, the author applied tools of deductive and inductive analysis, which made it possible to combine the conclusions of individual authors and formulate their vision of the problem. The method of analysis was also applied.

3

Results

According to a survey conducted by the author of the article in 2020, during the implementation of projects related to the use of digital technologies, enterprises faced a wide range of problems, including the following: • • • • • •

Weak technological competence of service consumers; Lack of experience in implementing similar projects; Inaccurate definition of the timing of the project; Lack of qualified managers; Lack of coordination in the interaction of departments; Weak involvement and interest of service consumers.

The considered list of problems should be conditionally divided into two levels. The first one includes problems associated with the management of companies and structural divisions, as well as with the final consumers of digital technologies. The following issues can be included in this group: • Lack of support from top management; • Project results are not always realistic; • Goals and objectives of the project are often set incorrectly; • Insufficient funding and provision of other resources; • Violation of the terms of provision of resources; • Weak involvement in the project implementation; • Lack of technological competence of users. The second group of problems is related to the implementation of the project and the team providing it. It includes the following issues: • • • •

Lack of experience in the implementation of such projects; Lack of qualified management personnel; Errors in planning the types and sequence of work; Inaccurate estimate of the deadlines for the implementation of the project; • Technical solutions are chosen incorrectly; • Weak interaction of structural divisions; • Changes in requirements and specifications.

It should also be noted that the problems associated with the organization of the project are quite significant for enterprises from the first and second groups. Another characteristic feature of the weak level of organization and implementation of the digitalization process of Kazakh companies is the absence or insufficient elaboration of strategies for the development and implementation of digital technologies: 30% of companies have no clear plan for the introduction of digital technologies in the medium or long term (Bukht & Hicks, 2018). There are the next problems of the “internal customer”: • Insufficient involvement, interest of users; • Opposition to the introduction of fully automatic distribution of goods in stores (retail); • Lack of qualified personnel for the implementation of the project, 1C programmers; • Technological problems; • Lack of maturity of decisions made; • Poor automation of processes; • Underdeveloped competencies; • Poor professional training of IT employees. Existing barriers hinder and slow down the wider adoption of digital technologies in the company (Alshanskaya & Sadykov, 2018). These barriers can be grouped as external and internal in relation to the company. External barriers include barriers that characterize the socio-economic policy of the country and are associated with other companies, including the following: • Suppliers and consumers who adhere to the “traditional model” and do not want to increase their costs caused by the introduction of digital technologies; • Users with great difficulty refuse familiar products. Simultaneously, as the main factor hindering the introduction of digital technologies in enterprises and organizations, the financial component should not be written off. The internal barriers to the use of digital technologies in the activities of Kazakh companies include the following: • Shortage of personnel versed in the use of digital technologies; • Misunderstanding of the global problem of the transition of society to the use of the platform economy and the general digitalization of processes; • The inability to coordinate production relations during the introduction of new digital technologies; • The impossibility of simultaneous introduction of digital innovations in all related companies connected by single production cooperation.

Innovative Development of Kazakhstan as an Experience for the Economic Development. . .

One of the most important problems in the development of the digital economy of Kazakhstan is the weak protection against criminal attacks due to external barriers in relation to the enterprise (particularly with state regulation) and the lack of a regulatory framework that allows regulating the introduction and use of digital technologies, misunderstanding of the possibilities of their functioning, efficiency, and impact on society as a whole. The digitalization of industry must be one of the drivers for increasing the efficiency and competitiveness of Kazakh industrial enterprises. Currently, the basis of the economy of Kazakhstan, with insufficient development of the manufacturing sector, is the raw material sector. Labor productivity remains low; technological equipment is insufficient compared to industrialized countries.

4

Conclusion

For the innovative development of Kazakhstan, it is required to create a unified and integral system of legal documents that allow regulating problems emerging in the implementation of information systems and technologies, highlighting issues that are subject to regulation by state structures. The country that must take on the most large-scale legislative changes and local regulations must also regulate point changes in the implementation of digitalization in companies. Foreign experience confirms the importance of involving business structures and civil society in lawmaking in the area of the digital economy, which will lead to a balance of interests of the government, society, and innovative companies. The state’s legal regulation of digitalization must take upon the creation of a system of legal relations for the control, functioning, synchronization, optimization, and security of innovative companies and the operations that are carried out. In conditions when Kazakhstan has a very low level of trust between partner companies and poorly developed management of horizontal communications, national legislation must primarily support the basic principles and conditions for the introduction of digital technologies, and then create horizontal links, develop industry and professional self-regulation, and promote mutual interest between partners participating in the digitalization process. It should be noted that there are also such problems as the inability to identify terms, definitions, and concepts related to digital technologies in the Kazakh language. Participants have no legal status in digital legal relations; their activities are not legally defined, etc. Standard models of legal relations that will contribute to legal regulation and resolution of problems of the conceptual apparatus, the legal status of the subject must be worked out. The main types and models of relationships between participants and business partners of innovative

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transformations must be formalized legally, and the main functions and the legality of their status must also be determined. The Internet is becoming a virtual platform where suppliers and consumers of goods and services enter into contracts every second according to predetermined rules. Without this, it is impossible to develop online commerce. Currently, Kazakh legal acts do not comply with unified international standards and do not exist at all. This situation leads to the loss of foreign business partners and disruption of contracts. Moreover, it does not contribute to the growth of the competitiveness of Kazakh goods and services, which ultimately leads to a decrease in foreign trade turnover and a shortfall in profits for business participants from Kazakhstan. Nowadays, the key problem for the introduction of digital technologies in the economy of Kazakhstan is to create and ensure the free functioning of the market for the exchange of information. Simultaneously, constantly modernizing information processing capabilities change the risk levels of infringement on the rights of legal participants in legal relations; this must be regulated at the state level. The accelerating pace of development of digital technologies requires the creation of updated regulations for the regulation and processing of personal data, contributing to the provision of adequate protection and the corresponding principle of the free exchange of information. It is necessary to create a simplified circulation of information to make it an object of sale and purchase. The government must protect personal data and private life with a reasonable balance of interests. To reduce risks and provide the necessary conditions for the introduction of digital technologies in the Kazakhstani economy, it is necessary to develop the main areas of legal coordination: • To ensure the protection of intellectual property rights in the information environment and legal mechanisms for regulating activities in the area of digital technologies; • To provide for preferential taxation for companies implementing digital technologies; • To develop a range of legal norms that optimizes telecommunications activities, contributing to the elimination of the isolation of national markets; • To update the regulatory and legal regulations of media services; • To provide a legal justification for the transition to electronic workbooks, the transition to remote forms of functioning of the labor market, including the electronic format for concluding labor contracts; • To optimize network retail, protect the rights of buyers, interact with foreign partners, and legally formalize claims for damages and supply of defective goods in the area of online commerce;

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• To harmonize legislation by concluding contracts in traditional and digital format, including all powers of the relevant authorities in the process of creating an electronic trading platform; • To create favorable conditions for implementing the activities of international and intersectoral digital platforms. To effectively implement digital innovations and reduce the risks of countering innovations, it is necessary to create a coordination center for managing this process, which will allow using the intellectual capabilities of companies and teams to the maximum. Innovative approaches in management create the most favorable conditions for maintaining a creative climate, including the following ones: • All-round encouragement by the management of innovative activities in the team. The support of the top management of companies contributes to the creation of a creative atmosphere in the team, aimed at introducing innovations, a positive attitude towards the free and creative search and implementation of innovations; • Unconditional support for the authors of innovations in all structural divisions of companies, providing them with conditions for the implementation of their innovative ideas (in the creation of technologies, new products, management, etc.); • Encouragement of the use of digital technologies and the introduction of telecommunication interactions into the process contribute to the involvement of all team reserves and the formation of new information collaborations, which allow for making optimal decisions. These will speed up the processes of innovative implementation and optimize the interaction of structural units for the exchange of technological information between units and individual employees; • The use of material and moral incentives, motivational systems, encouragement of innovation, and social and psychological stimulation encourages the innovative activity of employees; • The involvement of employees in the development and adoption of strategic decisions to promote digitalization at all stages of production or technological processes reduces the resistance of employees to the introduction of innovations, promotes efficient operation, improves the microclimate in the team, and increases labor productivity; • Constant updating of the level of competencies of employees and advanced training in the face of everincreasing competition in the labor market and technologies require constant updating of knowledge and its increment. Therefore, the ability and desire to be included in innovative processes must be cultivated in

O. V. Klimovets

the team. The development of new products must also become the main factor in commercial success (Bauer et al., 2017). That is why the training and retraining of personnel in the digital economy are becoming an integral part of the production cycle. Creating an atmosphere of innovative development, supporting innovators in the team, and creating a system to stimulate technological implementation become the main function of the company’s management. The success of top management in the digital economy is determined by the ability to encourage people to self-realization and selfdevelopment through economic, social, or other incentives. The main thing is the possibility of employees to show their potential to the fullest extent and their aspiration to implement their innovative ideas. The strategic goal of the company’s management is the need to maintain an atmosphere of innovative search and technological improvement in the managed company. The biggest threats posed by digitalization in the area of information security are a reduction in the number of jobs and deterioration of manageability in the short term. Kazakhstan is currently only trying to get involved in the global process of innovative technical and economic transformation, a component of which is digitalization. Kazakhstan is still far from the leading countries in this process, but the country can use the best practices of those leading the way. Foreign experience allows analyzing the positive and negative consequences of technological breakthroughs and identifying the macroeconomic effect of the introduction of digital technologies. The technological breakthrough will significantly affect the labor market. The introduction of digitalization will significantly change employment. Many professions will leave the labor market, meaning that the labor force, which should be able to retrain new professions quickly, will be released, and the demand for new and more highly qualified workers will increase. Therefore, the government authorities of high-tech countries have to be concerned about solving the problem of reducing social tension. Digital technologies have a significant impact on society and the economy. The impact is twofold: new opportunities and new challenges. Opportunities include emerging chances to accelerate the pace of economic development of technologically advanced countries and, as a result, to increase their competitiveness. Challenges include the need to change social relations, areas of influence, and traditional business models (Prokhorov & Konik, 2020). According to the analysis of statistics on the use of digital technologies in Kazakhstan, the role of information and communication technologies in the country’s economy is systematically increasing. These trends are most common in

Innovative Development of Kazakhstan as an Experience for the Economic Development. . .

the organization of intra-corporate business and Internet interaction of enterprises with partners: the level of use of ERP systems in Kazakhstan is comparable to Hungary and Latvia. Digital technologies are most actively spreading in the area of trade and communications. Along with this, there are significant lags in the use of information and communication technologies in Kazakhstan to disseminate broadband Internet access, presence in the network, and the use of information systems. It should be noted that Kazakh companies have distinctive features and pronounced patterns in implementing information technology in economic activity. The top management of Kazakh companies clearly understands the degree of influence of digitalization on the results of their business. Basically, the effect obtained from the introduction of information technologies corresponds to the expected results and often exceeds them. Business processes are accelerated and, as a rule, simplified, the accuracy and quality of the work performed are increased. Company specialists generally give a high assessment of the level of competence of employees in assessing the impact of information technology on business results. The technologies, which have the most positive impact on business, have received the greatest approval today. The importance of digital technologies will not decrease in the near future. Apparently, digital technologies will contribute to the development of new technological areas: social networks and supercomputer systems. It is also predicted that cloud technology, virtual, augmented and mixed reality systems, and additive technologies will have significant growth and impact on the development of digitalization in the country. The essence of technological innovation is that it is not the technology that is being transformed but the company’s business, the relationship between sellers, buyers, and management, and the interaction within the company. Nowadays, the company’s management, information technology specialists, and ordinary performers and workers understand the need to digitalize all business processes. Kazakh companies fully understand that it is impossible to compete in world markets without introducing systemic changes. The foundation of the digitalization processes of Kazakhstan’s economy is transformational changes at the company level. Simultaneously, there must be changes at the macro level: in the system of public administration and legal regulation. In this direction at the state level, there is a need for active action and decisions, which interested businesses and citizens of Kazakhstan are waiting for. The government must form a unified digital environment, develop trust services, learn to identify and authenticate interacting entities, protect against unauthorized access and modification of documents, verify the powers of participants in business processes, etc. The government must also be responsible for

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forming a digital trust infrastructure. It is necessary to adopt a single national concept that clearly defines the goals, objectives, and tools used.

References Ageev, A. I., & Smirnova, V. A. (2018). Adaptability of the high-tech complex to digital challenges. Economic Strategies, 20(1), 164–166. Alshanskaya, A., & Sadykov, B. (2018). Digitalization and formation of digital culture in Kazakhstan. Kazakhstan-Spectrum, 3(85), 7–14. Avdokushin, E. F. (2018). Digital economy: Strategy for the formation of a new development resource. Issues of the New Economy, 4(48), 4–11. Bauer, V. P., Silvestrov, S. N., & Baryshnikov, P. Y. (2017). Blockchain as a basis for the formation of augmented reality in the digital economy. Information Society, 3, 30–40. Belokopytova, O. G., Vasilieva, I. L., Gagaeva, A. K., Zhuikova, T. P., Kirkina, E. N., Klimovets, O. V., et al. (2014). Theoretical and applied aspects of modern science. Business-Science-Society. Bukht, R., & Hicks, R. (2018). Definition, concept, and measurement of the digital economy. International Organisations Research Journal, 13(2), 143–172. https://doi.org/10.17323/1996-7845-2018-02-07 Chandra, Y., & Wilkinson, I. (2017). Firm internationalization from a network-centric complex systems perspective. Journal of World Business, 52(5), 691–701. https://doi.org/10.1016/j.jwb.2017. 06.001 Gawer, A., & Cusumano, M. A. (2014). Industry platforms and ecosystem innovation. Journal of Product Innovation Management, 31(3), 417–433. https://doi.org/10.1111/jpim.12105 Harrison, D., Hoholm, T., Prenkert, F., & Olsen, P. I. (2018). Boundary objects in network interactions. Industrial Marketing Management, 74, 187–194. https://doi.org/10.1016/j.indmarman.2018.04.006 Klimovets, O. V. (2016). The influence of information technology on the development of international business. In L. N. Usenko (Ed.), Transformation of the system of world economic interaction in the context of modern global challenges: Materials of the International scientific-practical conference of the teaching staff, young scientists, graduate students, undergraduates and students (pp. 153–157). Rostov-on-Don. Klimovets, O. V. (2021a). Characteristic features of the development of the innovative economy in the conditions of digitalization. Bulletin of IMSIT, 3(87), 3–6. Klimovets, O. V. (2021b). Transition from the model of extensive economic growth to an innovative model: From the experience of China’s digitalization. In I. V. Shevchenko, L. V. Ponomarenko, & K. O. Litvinsky (Eds.), Economic development of Russia in a pandemic: the anatomy of self-isolation, global lockdown and the online future: Materials of the International scientific-practical conference (pp. 141–144). Krasnodar. Ovchinnikova, O. P., Kharlamov, M. M., & Kokuytseva, T. V. (2020). Methodological approaches to improve the efficiency of managing digital transformation processes in industrial enterprises. Creative Economy, 14(7), 1279–1290. https://doi.org/10.18334/ce.14.7. 110615 Panshin, B. (2019). Digital economy: Concepts and directions of development. Science and Innovations, 3(193), 48–55. President of the Republic of Kazakhstan. (2018, January 10). Message of the President of the Republic of Kazakhstan Nursultan Nazarbayev to the people of Kazakhstan “New opportunities for development in the conditions of the fourth industrial revolution.” Accessed October 27, 2020, from https://www.akorda.kz/ru/ addresses/addresses_of_president/poslanie-prezidenta-respublikikazahstan-n-nazarbaeva-narodu-kazahstana-10-yanvarya-2018-g

26 Pritvorova, T. P., Abzalbek, E. Z., & Kizimbayeva, A. (2020). IT services in Kazakhstan: Dynamics and opportunities for industrial digitalization. Economics, Entrepreneurship and Law, 10(11), 2727–2744. https://doi.org/10.18334/epp.10.11.111088 Prokhorov, A., & Konik, L. (2020). Digital transformation. Analysis, trends, world experience. Alpina Publisher.

O. V. Klimovets Veil, P., & Warner, S. (2019). Digital business transformation. Changing the business model for a new generation organization [What’s your digital business model? Six questions to help you build the nextgeneration enterprise] (I. Okunkova Transl. from English). Moscow: Alpina Publisher. (Original work published 2018).

Reducing the Digital Divide as a Mechanism to Ensure Sustainable Economic and Social Development Natalia A. Povetkina

, Anna S. Zueva

Abstract

With the development of the use of information technology, the digital divide (gap) between different social groups is spreading. As a rule, the victims of the digital divide are the older people and migrants. The paper analyzes and develops proposals for reducing the digital divide as a mechanism for ensuring sustainable economic and social development. The research object is public relations in the field of providing access to information, regardless of access to digital technologies. The authors identified the main directions for reducing the digital divide: providing citizens with access to the Internet as one of the basic human rights and the use of public-private partnerships and tax mechanisms to stimulate access to the Internet. The key research methods include analysis, synthesis, and comparative legal and statistical methods. The author’s positions and scientific schools in the field of information technology regulation are being studied. In conclusion, the authors substantiated the necessity of developing a methodology for reducing the digital divide as a mechanism for ensuring sustainable economic and social development of Russia, as well as maintaining a balance between reducing the digital divide and combating digital slavery by countering the threats of information subordination of the Internet user. Keywords

Tax administration · Internet · Social network · Digitalization · Digital divide · Digital inequality · Digital slavery

JEL Codes

D63 · D85 · E62 · L86 · H83 N. A. Povetkina (✉) · A. S. Zueva · A. A. Kopina Institute of Legislation and Comparative Law under the Government of the Russian Federation, Moscow, Russia

1

, and Anna A. Kopina

Introduction

In the conditions of the information society, the digital divide (gap) is aggravated—the lack of equal opportunities for all citizens to access information and electronic services. On June 11, 2020, UN Secretary-General António Guterres, at the General Assembly, dedicated to the role of new technologies in achieving the Sustainable Development Goals, noted that under the influence of the COVID-19 pandemic, it becomes vital to receive reliable and timely information about the infection. However, the digital divide does not provide the same opportunities for people to access the Internet (Guterres, 2020). Thus, along with economic and social inequality, it is precisely digital technologies that come to the fore. Simultaneously, the digital divide is observed between different countries and citizens of the same country. On the one hand, the Internet is necessary to obtain the necessary services. One of the first international acts adopted in the field of determining the right to access the Internet was the Okinawa Charter of the Global Information Society, which was adopted in 2000. According to paragraph 9 of this Charter, countries should strive to ensure that every person has access to the Internet. Paragraph 10 of the Charter determines that a key component of the strategy should be a continuous movement towards universal access for all (Presidential Executive Office, 2000). For example, according to the Federal State Statistics Service of the Russian Federation, only 80% of households in Russia had access to the Internet in 2020, of which only 65.9% from a personal computer (including a phone or tablet) (Federal State Statistics Service of the Russian Federation, 2020). On the other hand, a person becomes a hostage to the situation and is forced to use information and telecommunication networks to receive information, government services, and, in the pandemic conditions, food and medical services. The phenomenon in which a person is deprived of the opportunity to choose whether to use information technology in their daily lives or not has been called “digital slavery.” Over

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_5

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the past 20 years, this concept has been transformed from the mandatory use of information technology (the imposition of electronic services) to the exploitation of information about an Internet user and the violation of human rights to paid work. Additionally, the Internet space becomes an additional threat to a person’s information and economic security.

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Materials and Methods

The authors applied various research methods, including the analysis of the negative consequences of the deepening of the digital divide and state policy approaches aimed at providing citizens with access to the Internet in the framework of achieving sustainable development goals, as well as synthesis (generalization) of foreign and Russian experience in the field of combating digital slavery. The authors analyzed articles, monographs, and dissertations related to the legal regulation of relations on the Internet, theories of digital slavery, and the digitalization of public finance. The scientific contribution to the study of the legal regulation of relations on the Internet was made by Azizov (2016), Baturin (1991), Tedeev (2007), Khabrieva (2018), Petrova et al. (2021), and others. Dobrinskaya and Martynenko (2021), Belyaczkaya and Kniazkova (2018), Norris (2001), and others work on the issue of digital inequality (gap). The theory of digital slavery is described by Rogerson and Rogerson (2007), Professor Emeritus of Computer Ethics and former Director of the Center for Computing and Social Responsibility at De Montfort University; Dennis Snower (2018), Professor at the Hertie School of Government (Berlin), Senior Fellow, Blavatnik School of Government, University of Oxford, President of the Global Solutions Initiative. The issues of digitalization of the tax and financial sphere are analyzed in scientific studies by Tsindeliani et al. (2019), (Povetkina et al. (2020), Povetkina et al. (2018), Matytsin (2021), Zueva et al. (2021).

3

Results

3.1

The Right to Access the Internet

We should agree with R. A. Klychev, who draws attention to the fact that the current state of the information society in Russia and the content of strategic documents that determine its development allows us to talk about the right to access the Internet as one of the fundamental rights of a citizen in the Russian Federation (Klychev, 2020). However, it is not

entirely clear how to determine the content of this right and what components must be considered apart from directly maintaining the work and ensuring its safe use. In this regard, legal science is faced with the task of formulating the concept of “the right to access the Internet.” The content of this concept depends, among other things, on the country’s policy to eliminate the digital divide. The content of this right cannot be limited only to issues of expanding the availability of public services via the Internet or the development of digital technologies, artificial intelligence, or robotics. It should include the formation of conditions for the development of the network itself and ensuring the technical ability of users to connect to this network. It is no coincidence that the Decree of the Government of the Russian Federation “On approval of the state program of the Russian Federation ‘Information Society’” (April 15, 2014 No. 313), among the national development goals, also includes the goal of ensuring an increase in the share of households provided with broadband access to the Internet up to 97% in 2030. According to this document, the achievement of this goal will contribute to providing residents with equal opportunities for accessing the Internet (Government of the Russian Federation, 2014). Simultaneously, according to the “Unified Plan for Achieving the National Development Goals of the Russian Federation for the period up to 2024 and for the planning period up to 2030,” the activities that will be carried out to achieve this goal practically do not include tax incentives, which is a significant omission from the developers of the program” (Ministry of Economic Development of the Russian Federation, 2021).

3.2

Digital Slavery in the Context of the Spread of Human Rights Violations on the Internet

In the context of the spread of facts about human rights violations in the virtual space, it is required to make changes to the legislation of the Russian Federation in terms of guaranteeing human rights on the Internet, which has no analog in real life. The legal technique is undergoing significant changes in a dynamically changing world (Khabrieva, 2021). For example, it is necessary to control the use of targeted native advertising on the Internet and the settings for generating news feeds on social networks. Nowadays, the lack of state supervision over the rules for the formation of content in social networks that affect the behavior of the users of social networks in real life allows for manipulating human consciousness (Zueva & Vasilixina, 2021). Simultaneously, social networks turn into a political institution that

Reducing the Digital Divide as a Mechanism to Ensure Sustainable Economic and Social. . .

participates in managing the life of civil society (the fifth force), along with the legislative, executive, and judicial branches of government and the media. Additionally, the issue of gratuitous use by the owners of social networks of personal data for commercial purposes remains outside the legal field. Currently, the financial statements of the owners of social networks show an increase in excess profits due to the commercial use of user data (Matytsin, 2021). Moreover, people enter information about themselves (e.g., audio, video, photos, and text files) on their own, under the influence of content, and take surveys, wasting their time and money without receiving any material compensation for their work in return. In essence, this is how slaves provide their masters with free labor; in return, their owners give them free food, clothing, and shelter. Similarly, network users provide the owners of social networks with free information in exchange for the opportunity to communicate with each other. Moreover, slaves are free to “leave their masters” (change the social network) if they wish, but when they do, they must leave everything—their information, their friends and acquaintances, their reputation, and other external aspects of their personality. The solution to this problem is seen in providing an assessment of the used data in social networks with the subsequent possibility of their sale. However, the difficulty lies in the fact that there is currently no legal basis for protecting a user of a social network from slavery. The current international conventions for the protection of human rights do not contain norms regulating forced labor in the virtual space (Council of Europe, 1950; International Labour Organization, n.d.; United Nations, 1926).

3.3

Public-Private Partnerships for Bridging the Digital Divide

Demographic changes negatively affect the digital divide. For example, an increase in the number and proportion of older people, a decrease in the birth rate, and migration processes require increased and improved electronic services. Due to the need to reduce the digital divide, the use of information and communication technologies, including big data and artificial intelligence, can help improve the level of health care, education, and training, develop support for socially vulnerable groups, predict natural disasters, and increase social and political integration. Along with government measures, governments of all countries should encourage public-private partnerships to provide e-services. Foreign practice shows the successful results of such cooperation, including in the field of finance (Povetkina & Veremeeva, 2019). The digital divide has become a new challenge in the provision of banking services, taxation, and

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money circulation (Kuzovleva et al., 2021). An example of such cooperation is the digital platform MONI, developed and adopted in Finland and later throughout the EU. During the migration crisis from January 2014 to July 2017, the Finnish Migration Service received more than 41,000 asylum applications. During this period, migrants faced long waiting times for residence permits and local identity documents. During this time, the refugees could not access banking services, in particular monthly social payments. To bridge the digital divide, in 2015, the government partnered with Finnish startup MONI to launch a digital financial services pilot program to allow refugees to receive money and pay bills without opening a bank account. MONI has developed a prepaid debit card (Mastercard) associated with a unique digital identity stored on the blockchain that does not require a bank account or identity documents. The service facilitates social transfers between the government and refugees and creates a digital footprint that allows for credit scoring and increased access to other financial products such as credit. This technology is currently used in most European countries (Zueva, 2021). However, the world practice has not so many similar examples of bridging the digital divide. Thus, the issue of protecting human rights in virtual space remains extremely relevant (Inshakova, 2021).

3.4

Tax Mechanism for Reducing the Digital Divide

In current conditions, the need for the participation of the state government in stimulating citizens’ access to the Internet and reducing the digital divide determines the implementation of public finance policy (Povetkina et al., 2020). The development of tax administration is largely associated with the need to ensure access of taxpayers and other obliged entities to the Internet. However, the ongoing processes indicate that budget funds are allocated for the development of the services themselves while operating costs are shifted to the obliged persons. For the most part, citizens are presumed to have the necessary technical devices; this fact causes tension and creates conditions for digital inequality. For example, the desire of the country to reduce costs, related to the fulfillment of the obligation to pay taxes, led to the emergence of initiatives to establish the obligation for taxpayers to use the digital services of the tax authorities (Ministry of Finance of the Russian Federation, 2021; Frolova & Tsepova, 2021; Povetkina & Kopina, 2020). The object of personal income tax is income. However, the legislation on taxes and collections allows the possibility of accounting for significant and socially significant expenses of the taxpayer through the system of tax deductions. Nevertheless, there is currently no deduction that would somehow

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allow compensating the expenses of an individual related to meeting the needs for accessing the Internet. There is no non-taxable minimum that considers the physiological needs of the taxpayer, despite the existence of a general rule of establishing the tax taking into account the actual ability to pay it. Thus, we can assume that further development of the system of taxation of individuals will be carried out by more differentiation of taxpayers.

4

Conclusion

The foregoing emphasizes the importance of ensuring the recognition of the right to access the Internet and includes in it the rights to access technologies and technological devices, which will create conditions for its implementation, satisfying the minimum needs and leveling the financial conditions for their implementation. This can be done through direct budget financing of the relevant state programs, as well as through various tax incentives only for organizations to produce products and technologies and individuals who make expenses to provide themselves with the necessary technological devices. The solution to these issues will also ensure the uniform development of the constituent entities of the Russian Federation. Thus, due to the COVID-19 pandemic, the labor of remote workers began to be actively used, which means the possibility of equal access to the labor market, regardless of the place of residence of an individual, if an individual has access to the Internet. In this regard, overcoming the problems of digital inequality can slow down the internal migration of the population to large cities and allow for the uniform socio-economic development of territories. The availability of the Internet also affects the availability of continuing education, which, in the age of advanced technology, is a prerequisite for ensuring universal employment. In this regard, it is proposed to develop a methodology for reducing the digital divide as a mechanism for ensuring the sustainable economic and social development of Russia. Moreover, it is necessary to justify the experimental legal regulation of digital innovations on the Internet in terms of reducing the digital divide between the country’s citizens. Thus, the use of information technology brings great benefits to society: the level of health care, education, and training is increasing through the use of big data and artificial intelligence to increase the personalization of services; the support for vulnerable groups of the population is developing; the level of the forecasting and managing natural disasters is growing; social and political integration is increasing. However, it is necessary to strike a balance between reducing the digital divide and combating digital slavery by countering the threats of informational subordination of the Internet user.

Acknowledgments The research was prepared with the financial support of the Russian Foundation for Basic Research—scientific project 18-29-16062mk “The concept of legal support for the digitalization of public finance.”

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Russian Journal of Criminology, 12(5), 641–650. https://doi.org/10. 17150/2500-4255.2018.12(5).641-650 Povetkina, N., & Veremeeva, O. (2019). Models of diversification of investment projects in enterprises. International Journal of Civil Engineering and Technology, 10(2), 1460–1466. Presidential Executive Office. (2000, July 21). Okinawa Charter on Global Information Society (adopted by G8 leaders). Accessed January 18, 2022, from http://en.kremlin.ru/supplement/3170 Rogerson, S., & Rogerson, A. (2007). ETHIcol – Digital slavery. IMIS Journal, 17(5). Accessed January 18, 2022, from https://www. researchgate.net/publication/313619199_Digital_Slavery Snower, D. (2018, August 22). The digital freedom pass: Emancipation from digital slavery. VOXeu-CERP. Accessed January 18, 2022, from https://voxeu.org/article/digital-freedom-pass-emancipationdigital-slavery Tedeev, A. A. (2007). Theoretical foundations of legal regulation of information relations formed in the process of using global computer networks (Dissertation of Doctor of Legal Sciences). Moscow, Russia: Moscow University for the Humanities. Accessed January 18, 2022, from https://lawtheses.com/teoreticheskie-osnovypravovogo-regulirovaniya-informatsionnyh-otnosheniyformiruyuschihsya-v-protsesse-ispolzovaniya-glo Tsindeliani, I. A., Anisina, K. T., Burova, A. S., Kopina, A. A., Migacheva, E. V., & Rodygina, V. E. (2019). Main elements of taxation in the conditions of the development of digital economy. Utopia Y Praxis Latinoamericana, 24(Extra5), 129–137. United Nations. (1926). Convention on Slavery (Geneva, 25 September 1926, as amended by the Interim Protocol of 7 December 1953). Geneva, Switzerland; New York, NY. Accessed January 18, 2022, from https://www.un.org/ru/documents/decl_conv/conventions/con vention_slavery.shtml Zueva, A. S. (2021). Digital gap in the Information society. In А. Е. Melkov, A. S. Zueva, & R. A. Migunov (Eds.), XV youth science week of the North-Eastern Administrative District of Moscow (pp. 17–19). Stratagema-T. Zueva, A. S., Musatova, D. A., Britvina, V. V., Sorokin, A. Yu, & Nurgazina, G. E. (2021). Application of information technology to combat cyber fraud. CEUR Workshop Proceedings, 2922, 119–124. Accessed January 18, 2022, from http://ceur-ws.org/Vol-2922/ paper014.pdf Zueva, A. S., & Vasilixina, Y. V. (2021). Legal regulation of personal data protection in social networks. Theory and Practice of Project Education, 1(17), 37–38.

The Role of Blockchain in Public Administration in the Field of Economic Activity Marina V. Galkina

, Maksim Yu. Shamrin

Abstract

Nowadays, almost every mention of the word “blockchain” is associated with cryptocurrencies in one way or another. This way of thinking is ingrained in people’s minds because of the most high-profile and discussed cases of fraud or the cryptocurrency market crash, which have hurt many investors in an extremely negative way. However, if we abstract away from preconceptions and take apart the mechanics of blockchain technology, the situation is not so straightforward. In creating a model for improving the efficiency of public administration in the field of economic activity, it is necessary to study blockchain as a concept, as well as its practical applicability in public administration, using reallife examples from various jurisdictions. The key means and ways to achieve the goal is a comprehensive study of the advantages of blockchain technologies that will be useful in the field of public administration of the economy, using special legal, specific historical, formal dogmatic, and comparative legal methods and the method of legal forecasting. The paper raises the issues associated with the introduction of blockchain into the economic sector and analyses the blockchain’s benefits that will be useful in public administration when it is used. It analyses the integration of blockchain into public administration. The role of blockchain in such areas of the economy as finance, economic development, digitalization, agriculture, and others is analyzed. Based on this research, the benefits of blockchain in the economic sector, including the development of the entrepreneurial activity, are formulated. The paper identifies trends indicating that the continued implementation of good governance is not conceivable without M. V. Galkina (✉) · M. Y. Shamrin Kutafin Moscow State Law University (MSAL), Moscow, Russia e-mail: [email protected] L. M. Saydulaeva Department of Entrepreneurship and Innovative Development of the City of Moscow, Moscow, Russia

, and Lolita M. Saydulaeva

the introduction of groundbreaking blockchain technology. The study of the introduction of blockchain in different areas of public administration has led to the conclusion that the legislator should pay special attention to the financial sector because proposals aimed at improving this area of public administration will improve the standard of living of the population of Russia. Keywords

Blockchain · Economy · Technology · Government · Benefits · Groundbreaking technology · Finance · Public administration

JEL Codes

E2 · E5 · F1 · H7 · O1

1

Introduction

Blockchain is a distributed and decentralized register of digital data. In other words, it is an electronic database that stores information about transactions that take place on the blockchain network. This linear chain of data blocks is secure and does not allow for changes by third-party agents. Additionally, being distributed and decentralized, blockchain does not have a single copy of its data ledger because each user of the network retains a copy when they connect to it, nor does it have a single supervisory body capable of making changes to the network—the blockchain is maintained by network participants spread across the world who have adopted a consensus to work by certain rules for checking and validating transactions and recording data in the blockchain. The main purpose of blockchain technology is to implement and maintain integrity in distributed systems (Drescher, 2018, pp. 19–20).

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_6

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According to the information provided by PwC, one of the Big Four, blockchain technology has a significant impact on the global economy. Thus, it could increase global gross domestic product (GDP) by $1.76 trillion over the next decade (Migachev et al., 2019, pp. 23–34). It is safe to say that, these days, the Russian government is considering the active use of blockchain in the economic sector. According to the authors, to consider the role of blockchain in improving public administration in economic activity, it is necessary to identify specific attributes of the said technology that may be useful to the public sector (Clavin et al., 2020). Considering the above characteristics of blockchain, the team of authors immediately notes several benefits that will be useful in public administration when it is used. First, blockchain promotes the decentralized organization of the data register while preserving its integrity (Inshakova et al., 2021). This means that the data in the register of the government authority will be tamper-proof, and only authorized users or a group of users (validators) will be able to supplement and amend it. Furthermore, NGOs, educational institutions, or individual opinion leaders could also be some of the management hubs in this system for even more granular inspection and credibility of the entire process. The prospects of using blockchain within the electoral system can also be added to this section. Free and democratic elections without voter fraud will be possible thanks to the described characteristics of blockchain because the register into which voters are supposed to be recorded online will be controlled by authorized validators in a decentralized format, thus eliminating the possibility of voter fraud on the ground. Second, blockchain provides transparency of data storage. This implies decentralized access to data that is not controlled by a biased set of individuals. In other words, databases become available for independent inspection, which removes the problem of trust between government agencies and civil society—the scope for fraud and corruption schemes is minimized while the data itself is safe. Detailed monitoring of the financial activities of various organizations, law enforcement agencies, and other institutions is made possible by blockchain and its consensus. Third, there is an increase in managerial efficiency and a reduction in the cost of the process. As a high-tech product, blockchain minimizes the number of agents at work, which means a reduction in traditional staffing and, consequently, a reduction in the financial cost of maintaining the public administration apparatus. Blockchain and its smart contracts thus automate the execution of tasks and make the process more efficient in terms of time and the context of the absence of human error. Additionally, it is worth noting that the absence of human interaction in such a system will increase trust in the public administration itself because citizens will

M. V. Galkina et al.

be in contact with a virtual system devoid of the disadvantages of the human factor mentioned above. In fact, lower-wage disbursements and logistics costs would allow the budget to be reallocated to other tasks and processes such as tax collection, accounting, and another auditing of public life would take on a modernized form. Therefore, we can conclude that the advantage of using blockchain should be seen as its ability to ensure data availability and security in various public administration areas.

2

Materials and Methods

The goals and objectives set in the work determine the choice of research methods. Rules of law and legal relations in the field of public administration and implementation of executive power are studied using a special legal method. This method involves such approaches as description and analysis of administrative-legal rules and legal relations, their explanation, interpretation, and classification. These are logical research techniques. As part of the formal dogmatic method, the role of classification and systematization is especially significant. When classifying through the grouping of administrative and legal phenomena and concepts, these concepts are compared, which helps to form a more complete picture of each of them separately and of the studied subject as a whole. A comparative-historical research method is a historical approach to analyzing and evaluating the most important categories of public administration and administrative-legal institutions. The science of administrative law cannot ignore all the valuable and positive that has been accumulated by the administrative legislation of Russia, and that represents its contribution to the overall potential of the world legal culture (PwC, 2020). The scientific methods are related to each other, and each of them can be applied in combination with others. These methods have a common basis, which is determined by the property of the subject (object) that is being studied and learned—blockchain in public administration. The comparative-legal method and the method of legal forecasting allow considering the specific legal nature of blockchain, comparing homogeneous legal phenomena, and identifying the prospects of legal relations in dynamics.

3

Results

3.1

Modernization of the Land Registry in Georgia

Collecting and storing data on land and real estate titles is a serious problem that the traditional registry cannot solve. Obsolete databases are often not updated, and many records

The Role of Blockchain in Public Administration in the Field of Economic Activity

are made with errors and do not reflect the reality of the land register. Ownership, as one of the key rights of a citizen of any country, must be respected unmistakably. In the context of this task, the Tbilisi government has partnered with BitFury to create a blockchain-based land registry. Back in 2017, the state blockchain-based land registry in Georgia had more than 100,000 property records entered in accordance with all necessary standards.

3.2

About Voting in Switzerland

The city of Zug in Switzerland is considered a corner of hightech entrepreneurship, so experiments with blockchain have not been long in coming. For example, in 2018, the city of Zug organized and successfully tested blockchain-based voting. Although the event was experimental, the fact that it exists and the interest in this form of blockchain application paves the way for further testing of the technology in democratic states.

3.3

Business Registration on the Blockchain in Delaware

A loyal business environment is one of the key factors in developing any nation’s economy. Not uniquely Delaware’s problem, until recently, was an expensive business and corporate transactions, coupled with the tangible costs of processing various paperwork from business notaries. To resolve this situation, Delaware enlisted the help of IBM to minimize these cost items by switching these processes to blockchain and smart contracts. Moreover, in 2018, a law was passed that allowed businesses to do their actual registration in a blockchain registry, thereby bypassing costly notaries and other agents. The above examples describe blockchain as a promising technology that could significantly improve the efficiency of public administration and reduce the cost of maintaining the state apparatus, as well as increase citizen trust in government.

3.4

Blockchain and Agriculture

Blockchain is used to track wine shipments. Chinese company Tencent develops a blockchain platform (Peng, 2020) to monitor all stages of wine production, transportation, and sales for Changyu, a major spirits producer. This blockchain solution will allow consumers to get full information about

35

the product they are buying: the variety, the production place, etc. In December 2017, the first cryptocurrency trade between Russia and Turkey took place. Turkey bought 3000 tonnes of Russian wheat, paying in 46 bitcoins (30 million rubles as of December 2017). The transaction was carried out by Prime Shipping Foundation, a transportation company owned by Rosneft and Sberbank, in cooperation with Quorum Capital Ltd. and Interchart LLC. The grain was shipped from Rostovon-Don to Samsun, Turkey. Notably, this was the first deal to pay for the ship’s freight in cryptocurrencies (Almeida, 2018). Ivan Vikulov, a representative of Prime Shipping, noted that such transactions would allow for instant payment for agricultural products and help countries that cannot use USD for trade transactions due to sanctions (e.g., Iran) (Reiff, 2021). Bitcoin futures from the CME Group (Inshakova et al., 2020) were used to hedge the transaction risk. In early January, China’s Shandong Bohi Industry first used a blockchain platform to sell soybeans to the American agribusiness Louis Dreyfus (Jess, 2018). When it comes to financial management, it is safe to say that blockchain has the potential to improve the governance of the banking sector (Matytsin, 2021). Thanks to blockchain’s capabilities, users of banks worldwide can access financial services where they would not otherwise be able to. In particular, people in countries where standard banks are not readily available can use blockchain technology to access a range of services. For example, it is necessary to note the massive use of blockchain technology for instant money transfers between countries with virtually no fees or delays. According to Paul Domian, former global head of research, analytics, and data at investment bank Tellimer (formerly Exotix), emerging markets are the most promising beneficiaries of blockchain technology. He also argues that because “frontier markets in Latin America, sub-Saharan Africa, and South Asia are severely underperforming and their average performance is less than half that of the best performing economies, they are ready to take advantage of blockchain” (Rusakova et al., 2019). A. Inshakova (Inshakova et al., 2020) also argues this for the BRICS countries. Of particular importance is the fundamental fact that the blockchain contains data about all transactions that pass through it. Tim Draper, a US venture capitalist, emphasizes this point when predicting a bright future for bitcoin in a new blockchain-based financial system (Partz, 2019). Officials at the Russian Ministry of Finance, the Ministry of Economic Development, the Federal Tax Service, and the Ministry of Finance take a similar position today (Akimbo, 2022).

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Conclusion

A. Advantages of the technology are as follows: • Increasing the speed of information transfer and establishing a single data registry; • Reducing the cost of employing clerical staff; • Increasing security and guaranteeing the confidentiality of documents within a restricted access framework; • The ability to automate the activities of suitable agencies using smart contracts. B. Possible sectors for the use of blockchain in public administration (in the economy) are as follows: • Budgeting processes—automated execution and budgeting based on smart contracts (Invest Foresight, 2018); • Tax administration—automated tax collection and autonomous collection of relevant tax information. Eliminating non-payment of taxes; • Customs control—a transparent system for obtaining customs duties and minimizing customs law violations; • External and internal financial control—automation of control processes; • Anti-monopoly regulation—organization of an open and decentralized public procurement control system. C. Other examples of the use of blockchain within government structures are as follows: • Modernization of land registries; • Cryptographic protection of intellectual property; • External and internal financial control—automation of control processes; • Digitalization of logistics systems; • Optimization of document management; • Digitalization of various certificates and documents in the economic sphere. There is no doubt that the use of blockchain will increase the security and reliability of public administration processes and make it (public administration) more efficient. Thanks to its digital platform and multifunctionality, blockchain can reduce bureaucratic burdens. Nowadays, almost any type of transaction can be represented in a distributed registry. Access to this registry could be the basis for executive cooperation to build networked public services and, in some cases, to simplify the implementation of executive power. These measures could contribute to the efficiency of the entire government. Blockchain has its own characteristics that prevent it from being integrated into certain government sectors in an unchanged form without adaptation. For example, blockchain can be chosen to be public or private if data

needs to be stored in a special way in a closed format or if a certain type of consensus needs to be established so that data can be changed in the process. Nevertheless, blockchain is flexible—with the right interest in the technology and an objective assessment of its benefits, integration into public administration is only a matter of time (various countries are involved in at least 200 blockchain initiatives) (Berryhill et al., 2018). Acknowledgments This work was financially supported by Grant from the President of the Russian Federation NSh-3270.2022.2 “Evolution or revolution of civil justice: digitalization through the prism of artificial intelligence.”

References Akimbo. (January 28, 2022). Information about the “road map” for cryptocurrencies in Russia. Accessed February 1, 2022, from https:// bitnovosti.com/2022/01/28/poccijckoe-ppavitelctvo-ppinyalodopozhnuyu-kaptu-po-kpiptovalyutam/ Almeida, I. (2018, January 23). First cryptocurrency freight deal takes Russian wheat to Turkey. Bloomberg. Accessed February 1, 2022, from https://www.bloomberg.com/news/articles/2018-01-23/firstcryptocurrency-freight-deal-takes-russian-wheat-to-turkey Berryhill, J., Bourgery, T., & Hanson, A. (2018). Blockchains unchained: Blockchain technology and its use in the public sector. OECD Working Papers on Public Governance No. 28. Paris, France: OECD Publishing. https://doi.org/10.1787/3c32c429-en. Clavin, J., Duan, S., Zhang, H., Janeja, V. P., Joshi, K. P., Yesha, Y., et al. (2020). Blockchains for government: Use cases and challenges. Digit. Gov.: Res. Pract., 1(3), 22. https://doi.org/10.1145/3427097 Drescher, D. (2018). Blockchain basics: A non-technical introduction in 25 steps. DMK Press. Inshakova, A. O., Baltutite, I. V., & Kochetkova, S. Y. (2021). Electronic and digital tools for neo-industrialization in the contract relations arising from public procurement of economic entities of the EAEU countries. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 1439–1448). Springer. https://doi.org/10.1007/978-3-03056433-9_149 Inshakova, A. O., Goncharov, A. I., & Ershova, I. V. (2020). Digital blockchain registration of legally significant stages of complex goods export-import supplies by business entities of the EAEU and BRICS jurisdictions. In A. Inshakova & E. Inshakova (Eds.), Competitive Russia: Foresight model of economic and legal development in the digital age (pp. 328–336). Springer. https://doi.org/10.1007/ 978-3-030-45913-0_37 Invest Foresight. (2018, January 25). Russia for the first time sold wheat for bitcoins. Accessed February 1, 2022, from https://www.if24.ru/ rossiya-prodala-pshenitsu-za-btc/ Jess, L. (January 24, 2018) Turkish buyer paid for grain delivery from Russia with bitcoins. Forklog. Accessed February 1, 2022, from https://forklog.com/turetskij-pokupatel-oplatil-bitkoinamidostavku-zerna-iz-rossii/ Matytsin, D. E. (2021). Key elements of the system of guarantees of compliance with the legitimate interests of the parties of investment transactions: Interdependence and functions. Legal Concept, 20(4), 125–135. https://doi.org/10.15688/lc.jvolsu.2021.4.17 Migachev, Y. I., Petrov, M. P., & Shamrin, M. Y. (2019). Methodology and methodology of administrative and legal research; A textbook. Prospekt.

The Role of Blockchain in Public Administration in the Field of Economic Activity Partz, H. (2019, February 18). Tim draper predicts crypto will rule, only criminals will use cash in five years. Cointelegraph. Accessed February 1, 2022, from https://cointelegraph.com/news/tim-draperpredicts-crypto-will-rule-only-criminals-will-use-cash-in-five-years Peng, T. (2020, August 2). Tencent builds blockchain platform for China’s oldest wine producer. Cointelegraph. Accessed February 1, 2022, from https://cointelegraph.com/news/tencent-buildsblockchain-platform-for-chinas-oldest-wine-producer PwC. (2020). Blockchain technologies could boost the global economy US$1.76 trillion by 2030 through raising levels of tracking, tracing and trust. Accessed February 1, 2022, from https://www.pwc.com/

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gx/en/news-room/press-releases/2020/blockchain-boost-global-econ omy-track-trace-trust.html Reiff, N. (2021, October 26). How blockchain can help emerging economies. Investopedia. Accessed February 1, 2022, from https:// www.investopedia.com/tech/how-blockchain-can-help-failingeconomies/ Rusakova, E. P., Frolova, E. E., Gorbacheva, A., & Kupchina, E. V. (2019). Implementation of the smart-contract construction in the legal system of Russia. In 6th International Conference on Education, Social Sciences and Humanities (pp. 748–753). Istanbul.

Trends in Dispute Resolution in E-Commerce: China’s Experience Elena P. Ermakova

and Sergey Sh. Shakirov

Abstract

China’s best practices in the field of dispute resolution in e-commerce are explored in the article using the case study method. In the result the article revealed China’s best practices in the field of dispute resolution in e-commerce. As the case analysis of modern Chinese experience has shown, various online dispute resolution (ODS) mechanisms are available and demonstrate high efficiency in the digital economy. The key trend of the economic and legal system of China in the studied area is decentralization. The identified trend is that e-commerce platforms (for example, Alibaba, Taobao) launch and implement their own online dispute resolution (ODS) practices. In addition to this, there are state online courts. Mediation based on high technology and artificial intelligence is the main online dispute resolution (ODS) mechanism in China. The experience of China can be useful for other countries developing e-commerce. In particular, for China’s largest foreign trade partners, such as Russia and the EAEU countries. Keywords

Dispute resolution · ODS · ODR · ADR · E-commerce · Alibaba · PRC law

1

Introduction

Over the past 30 years, China has become one of the most influential world powers, creating its own development model. The accumulated powerful potential of globalization (Matytsin et al., 2022) and the high achievements of the economy over the past three decades have allowed China to offer the world a new model of globalization—the “One Belt, One Road” initiative as a concept aimed at creating a new mechanism for global cooperation between countries based on the principles of cooperation, mutual assistance, mutual benefit, and inclusiveness in the direction of the “community of common destiny” through an innovative implementation mechanism (Liu, 2020; Xinhuanet, 2020). According to “Statista Digital Market Outlook,” China’s e-commerce market revenue will reach $1.5 trillion in 2022. In the USA, which occupies the second place in the world, this figure is about $875 billion and in Japan—$241 billion (Statista, 2022). China accounted for more than half (50% in 2021) of global e-commerce retail sales, with sales exceeding the combined sales of Europe and the USA. Nowadays, China is home to the largest number of digital shoppers globally, with more than 780 million people (Ma, 2022). Ten days after the above sale, courts in Hangzhou, Shenzhen, and Shanghai received 1561, 568, and 221 lawsuits, respectively, relating to Alibaba’s activities on November 11, 2016, in just a few cities (Juanjuan, 2018).

JEL Code

K24

E. P. Ermakova (✉) · S. S. Shakirov Law Institute, Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; [email protected]

2

Materials and Methods

The features and prospects of e-commerce are studied by Ermakova and Frolova (2022), Inshakova (2019), Juanjuan (2018), Liu and Weingast (2018), Liu (2020), Loebl (2019), Ma (2022), Matytsin (2021), Mukhtar et al. (2021), Rusakova (2021), Rusakova et al. (2021), Shi et al. (2021), Staff (2014), Zheng (2020). China’s best practices in the field

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_7

39

40

E. P. Ermakova and S. S. Shakirov

of dispute resolution in e-commerce are explored in the article using the case study method.

3

Results

The online retail boom happened for various reasons: a large number of Internet disputes, a large distance between the plaintiff and the defendant (buyer and seller), insufficient financial resources of the plaintiffs, the insignificant cost of claims, and other factors (Loebl, 2019; Zheng, 2020). Like eBay and Amazon, Taobao provides a C2C retail platform (Matytsin, 2021). Through many years of development, Alibaba Corporation has established its comparatively perfect e-commerce dispute resolution system (Creemers et al., 2018; Inshakova, 2019; Liu, 2020; National People’s Congress of the People’s Republic of China, 2020; Shi et al., 2021; Standing Committee of the National People’s Congress of the People’s Republic of China, 2018; UN General Assembly, 2016; UNCITRAL, 2010). According to Chinese authors, this mechanism meets the characteristics and needs of online transactions and resolves many disputes in the field of online transactions at a low cost (Juanjuan, 2018). Alibaba has developed a number of internal documents. The listed regulations are available on the Alibaba website in the May 2019 edition (Taobao, 2017, 2019a, 2019b). Alibaba has set up various online dispute resolution platforms. In the event of disputes arising from the transaction, in accordance with the principle of “autonomy,” negotiations or another alternative method can be chosen to resolve disputes. In Taobao Consumer Service if the seller has not negotiated with the buyer three days after the refund application was submitted. If the parties have not fulfilled the agreement reached during the negotiations. If the transaction has been completed, but the consumer has found that after-sales service is required, then the consumer can file relevant complaints 15 days after the completion of the transaction for reasons such as delayed delivery, breach of promise, etc. Simultaneously, the parties must provide evidence, including product photos, Aliwangwang chat records, and Taobao records regarding the transaction procedure. Although the decision made by the consumer service is not binding, Taobao can directly take action against the seller and force the seller to comply with the decision through private enforcement measures (Juanjuan, 2018). Currently, Chinese courts are actively transforming and improving to create the People’s Court Informatization 3.0 system, which focuses on data and makes it the basis of the future general online court (Ermakova & Frolova, 2022; Staff, 2014). BIC has jurisdiction over certain types of Internet-related cases to be heard by the Beijing People’s Court of First Instance. These are primarily disputes in online

stores and disputes over service contracts, lending, copyrights, and domains (Beijing Internet Court, 2019). The website of the Beijing Internet Court states that the “Electronic Trial Platform” is the best link between the court and the parties to the dispute. The platform was created on the basis of the concept of “openness, inclusiveness, and neutrality, as well as—data exchange, innovation, modernization, security, and control”/The public can attend open court hearings, view court documents, and request information about specific cases, laws, and regulations. In 2021, the Beijing Internet Court accepted 55,926 new cases and resolved 46,005 of them. Each judge resolved an average of 1095 cases, ranking first among the courts in Beijing (Beijing Internet Court, 2022b). Efforts have been made to strengthen the environmental management of the court’s online platform. A way was created to identify merchants and operators in the C2C transaction mode. The falsification of the volume of transactions was rejected, with the compensation amounts to be based on the falsified amount. Obtaining fake “likes” from consumers through promises of refunds has been found to be fraudulent (Beijing Internet Court, 2020, 2022a; Rusakova et al., 2021).

4

Conclusion

So, the article revealed China’s best practices in the field of dispute resolution in e-commerce. As the case analysis of modern Chinese experience has shown, various online dispute resolution (ODS) mechanisms are available and demonstrate high efficiency in the digital economy. The key trend of the economic and legal system of China in the studied area is decentralization. The identified trend is that e-commerce platforms (for example, Alibaba, Taobao) launch and implement their own online dispute resolution (ODS) practices. In addition to this, there are state online courts. Mediation based on high technology and artificial intelligence is the main online dispute resolution (ODS) mechanism in China. The experience of China can be useful for other countries developing e-commerce. In particular, for China’s largest foreign trade partners, such as Russia and the EAEU countries. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project No. 090222-2-000 “Development of the concept and models of digital dispute resolution in the context of creating a common information area of Eurasian Economic Union countries” (Supervisor: Frolova E.E.).

References Beijing Internet Court. (2019, March 26). Approach Beijing Internet Court deeply integrating intelligent technology into judicial trial.

Trends in Dispute Resolution in E-Commerce: China’s Experience Accessed February 22, 2022, from https://english.bjinternetcourt. gov.cn/2019-03/26/c_26.htm Beijing Internet Court. (2020, August 6). Beijing Internet Court promotes one-stop diversified dispute resolution and litigation source governance. Accessed February 22, 2022, from https:// english.bjinternetcourt.gov.cn/2020-08/06/c_274.htm Beijing Internet Court. (2022a, February 25). Online platforms, specialist mediation help courts resolve cases more rapidly. Accessed February 22, 2022, from https://english.bjinternetcourt.gov.cn/ 2022-02/25/c_518.htm Beijing Internet Court. (2022b, January 26). BIC’s work in 2021. Accessed February 22, 2022, from https://english.bjinternetcourt. gov.cn/2022-01/26/c_506.htm Creemers, R., Triolo, P., & Webster, G. (2018, June 29). Cybersecurity Law of the People’s Republic of China (Effective June 1, 2017). New America. Accessed February 22, 2022, from https://www. newamerica.org/cybersecurity-initiative/digichina/blog/translationcybersecurity-law-peoples-republic-china/ Ermakova, E., & Frolova, E. (2022). Using artificial intelligence in dispute resolution. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the Digitisation of industry: Entrepreneurial environment (pp. 131–142). Springer. https://doi.org/10.1007/978981-16-4621-8_11 Inshakova, A. O. (2019). Qualified legal aid in conflict prevention and resolution: Pre-trial and procedural methods. Legal Concept, 18(1), 6–14. https://doi.org/10.15688/lc.jvolsu.2019.1.1 Juanjuan, Z. (2018). Chapter 10: On China cross-border online dispute settlement mechanism-following UNCITRAL TNODR and Alibaba experience. In: First UNCITRAL Emergence Conference: “Regional perspectives on contemporary and future harmonization agenda in international trade law” (pp. 191–228). Macau SAR, China. Accessed February 22, 2022, from https://www.wgtn.ac.nz/__data/ assets/pdf_file/0004/1642594/10-juanjuan.pdf Liu, I. (2020). “Digital Silk Road” as an innovative basis of the global project “One belt, one road”. Innovations and Investments, 12, 278–282. Liu, L., & Weingast, B. (2018). Taobao, federalism, and the emergence of law, Chinese style. Minnesota Law Review, 111. Accessed February 22, 2022, from https://scholarship.law.umn.edu/mlr/111 Loebl, Z. (2019, December 16). Can a robojudge be fair? Kluwer Arbitration Blog. Accessed February 22, 2022, from http:// arbitrationblog.kluwerarbitration.com/2019/12/16/can-a-robojudgebe-fair/?print=print Ma, Y. (2022, February 1). E-commerce in China – statistics & facts. Statista. Accessed February 22, 2022, from https://www.statista. com/topics/1007/e-commerce-in-china/#dossierContents__ outerWrapper Matytsin, D. E. (2021). Retail financing of investments by means of remote digital computer algorithm. Legal Concept, 20(2), 150–158. https://doi.org/10.15688/lc.jvolsu.2021.2.20 Matytsin, D. E., Goncharov, A. I., & Inshakova, A. O. (2022). Vectors of development of legal regulation to means of individualization in the BRICS Association. In A. O. Inshakova & E. E. Frolova (Eds.), The transformation of social relationships in industry 4.0: Economic security and legal prevention (pp. 279–288). Information Age Publishing. Mukhtar, H., Saleem, H. A. R., & Malik, Zia-ud-Din. (2021). Tracking the development of intelligent court system in China. International Research Journal of Management and Social Sciences, July–Sep, 255–263. Accessed February 22, 2022, from https://www.

41 researchgate.net/publication/358694567_Tracking_the_Develop ment_of_Intelligent_Court_System_in_China/link/ 620f62974be28e145c9df32d/download National People’s Congress of the People’s Republic of China. (2020, January 3). General Provisions of the Civil Law of the People’s Republic of China. Beijing, China. Accessed February 22, 2022, from http://www.npc.gov.cn/englishnpc/lawsoftheprc/202001/ c983fc8d3782438fa775a9d67d6e82d8.shtml Rusakova, E. P. (2021). Integration of “smart” technologies in the civil proceedings of the People’s Republic of China. RUDN Journal of Law, 25(3), 622–633. https://doi.org/10.22363/2313-2337-2021-253-622-633 Rusakova, E. P., Frolova, E. E., & Inshakova, A. O. (2021). Legal Regulation of Internet Courts in China. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 1515–1521). Springer. https://doi.org/10.1007/978-3-030-69415-9_167 Shi, C., Sourdin, T., & Li, B. (2021). The smart court – A new pathway to justice in China? International Journal for Court Administration, 12(1), 4. https://doi.org/10.36745/ijca.367 Staff, A. (2014, July 17). How Taobao is crowdsourcing justice in online shopping. Alizila. Accessed February 22, 2022, from https:// www.alizila.com/how-taobao-is-crowdsourcing-justice-in-onlineshopping-disputes/ Standing Committee of the National People’s Congress of the People’s Republic of China. (2018). E-Commerce Law of the People’s Republic of China (adopted at the Fifth Session of the Standing Committee of the 13th National People’s Congress on August 31, 2018). Beijing, China. Accessed February 22, 2022, from https://ipkey.eu/ sites/default/files/documents/resources/PRC_E-Commerce_Law.pdf Statista. (2022, January 14). Revenue of e-commerce worldwide in 2022, by country. Accessed February 22, 2022, from https://www.statista. com/forecasts/1283912/global-revenue-of-the-e-commerce-marketcountry Taobao. (2017, December 12). Tmall international dispute resolution rules [天猫国际规则]. Retrieved from https://world.taobao.com/ wow/oversea/act/seller-rule (Accessed 22 February 2022). Taobao. (2019a, May 6). Taobao rules [淘宝网市场管理与违规处理 规范]. Accessed February 22, 2022, from https://rulechannel. taobao.com/ Taobao. (2019b, May 6). Taobao rules of dispute settlement [淘宝平台 争议处理规则]. Accessed February 22, 2022, from https:// rulechannel.taobao.com/?type=detail&ruleId=99&cId=1154& spm=a2177.72311#/rule/detail?ruleId=99&cId=1154&spm= a2177.72311 UN General Assembly. (2016). Resolution A/RES/71/138 “Technical Notes on Online Dispute Resolution of the United Nations Commission on International Trade Law” (adopted on December 13, 2016). New York, NY. Accessed February 22, 2022, from https:// digitallibrary.un.org/record/853454?ln=zh_CN UNCITRAL. (2010). Online dispute resolution. Accessed February 22, 2022, from https://uncitral.un.org/ru/texts/onlinedispute Xinhuanet. (2020, July 1). China’s e-commerce thrives, transactions exceeding 34 trillion yuan in 2019. Accessed February 22, 2022, from http://www.xinhuanet.com/english/2020-07/01/c_ 139181331.htm Zheng, J. (2020). Online resolution of e-commerce disputes: Perspectives from the European Union, the UK, and China. Springer. https://doi.org/10.1007/978-3-030-54120-0

Transformation of Settlement Relations in the Context of Industry 4.0: Conversion of Blockchain Club’s Crypto-codes into Legitimate Analogues Denis E. Matytsin , Agnessa O. Inshakova , and Alexander I. Goncharov

Abstract

The authors investigate the rapid transformation of digital settlement tools—crypto-codes of anonymous members of private blockchain clubs into legitimate analogs—digital monetary units of countries. This interest is being gradually transformed into purposeful efforts by countries to legitimize these digital settlement tools—crypto-codes as a kind of public money—digital currencies. The country has gratuitously received a proven and viable legal structure. This legal structure is based on information computer technologies and is quite suitable for creating a public and generally binding settlement instrument—a digital monetary unit of any contemporary jurisdiction. In this regard, continuous scientific and legal prevention and predictive research on the main trends and dynamics of changes in public relations are necessary for their timely and high-quality public regulation. Keywords

Industry 4.0 · Blockchain club · Crypto-codes · Digital currency · Free will · State · Transformation · Settlements

JEL Codes

D91 · F42 · F43 · F64 · Q15 · O31 · O32 · O33

D. E. Matytsin (✉) Volgograd State University, Volgograd, Russia Volga Branch of the International Law Institute, Volzhsky, Russia

1

Introduction

Over the past decade, people have increasingly used the Internet as an information space in which they organize their communities of interest; such communities have received their characteristic name—social networks. The Internet consists of billions of computers connected to each other, the images from which are transmitted via cables to monitors. This image can be with text, photo, or video content accompanied by sound. To receive such content on a computer, the subject needs to search for certain websites on the Internet, enter them for a fee or free of charge, and receive a stream of information on the necessary content (Goncharov & Inshakov, 2020). The Internet allows us to remotely buy goods, including home delivery services; credit organizations provide remote banking services. Almost all bank settlements and payments can be made via Internet banking. Since 2008, special settlement clubs have appeared on the Internet, within which initiative programmers have launched private settlement tools (program codes). Participants of these groups can exchange these settlement instruments with each other, receiving certain goods and services in return, including the opportunity to exchange these settlement instruments for real money. Such an illegitimate private settlement system provides for the networking of many electronic wallets, the use of which is possible only with the help of individual logins and passwords (Goncharov & Inshakov, 2020). The movement of information through communication channels in this settlement system occurs exclusively in encrypted form; each operation is recorded in the communication node of each participant in the calculations and stored in the archive folder permanently (blockchain). A record that is fixed imperceptibly cannot be deleted, changed, or distorted. Therefore, the so-called crypto sector arose, and these digital settlement tools—crypto-codes—were rapidly developed (Inshakova et al., 2020).

A. O. Inshakova · A. I. Goncharov Volgograd State University, Volgograd, Russia; [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_8

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Materials and Methods

The authors studied “On digital financial assets, digital currency, and amendments to certain legislative acts of the Russian Federation”, “On currency regulation and currency control” and “Accounting of financial investments”. Judicial acts concerning the studied issues were also analyzed.

3

Results

Approximately 1% of еру volume ща global financial assets in 2022 is a digital settlement tool—crypto-codes, the turnover of which is carried out on foreign Internet platforms and exchanges. According to the Bank of England estimates, 95% of the settlement digital tools—crypto-codes—currently in circulation are unsecured (Central Bank of the Russian Federation, 2022b). The term “digital currency” has firmly entered the normative legal tools. The mention of this term provides for the creation of a legitimate monetary unit of the country, secured by all assets of the Central Bank (Ministry of Finance of the Russian Federation, 2002; Goncharov & Inshakov, 2020; Inshakova et al., 2018). It should be pointed out that, according to the legislator, the entire cycle of crypto-codes occurs as if in a vacuum. “The federal law regulates the relations arising during the issuance, accounting, and circulation of digital financial assets, peculiarities of the operator of the information system in which digital financial assets are issued . . .” (Russian Federation, 2020). Any subject, at their will and in their interests, creates such property using encryption software on a computer. The legislator very briefly outlined in the federal law (Russian Federation, 2020) his understanding of digital currency. The digital currency is a special legitimate kind of currency in “On currency regulation and currency control” (Russian Federation, 2003), from 2021. We do not see any special differences from our term: settlement digital tools—cryptocodes. According to the legislator, members should expect in full confidence that the designated operator will faithfully enforce the procedure for issuing digital currency in the form of a set of electronic data. Moreover, members should expect compliance of the order of issue of digital currency with the rules of this information system. This reservation does not specify or legitimize anything (everything just has to happen exactly according to the charter of the anonymous “blockchain club”). The same thing again: everything should happen exactly according to the charter of the anonymous “blockchain club.” This is the first time we have seen such a somersault of legislative regulation in our entire research practice. This is

completely unacceptable because the node of the information system is not a person and not a subject of law and because the node itself (one of the computers of some user—an anonymous member of the “blockchain club”) works automatically according to the algorithm of the program, will never give any answers to any questions. The proper functioning of any computer algorithm always and unambiguously depends on a particular person. Simultaneously, due to decentralization, cryptocurrencies do not have a subject that ensures their conditional solvency (Arbitration Court of the City of Moscow, 2018; Federal Financial Monitoring Service (Rosfinmonitoring), 2014). Analyzing the created legislative matter, we can again verify the correctness of our conclusion. A digital currency is a kind of individual set of characters that arises spontaneously and creatively for the implementation of a specific entrepreneurial idea inside the code of a special computer algorithm. According to the rules of a particular “blockchain club,” this individual set of symbols can, first, be replicated and, second, be used in calculations within the club. This computer algorithm allows one to generate and use the same computational settlement digital tools—cryptocodes that function in an information system (on a specific website). Access to the information system (to a specific website) is carried out through the Internet in the presence of special software without restrictions. That is, access is for everyone who wants to voluntarily join this anonymous “blockchain club” of owners and users of such settlement digital tools—crypto-codes. We believe that, as objects of civil rights, digital financial assets—a type of property in electronic form, requires, at least, more precise regulation at the legislative level and further study at the doctrinal level. Simultaneously, it is necessary to notice the attention and, above all, the fiscal interest of the state elites of many jurisdictions in digital currencies. This interest is gradually transformed into a purposeful effort to legitimize these digital settlement tools—crypto-codes as a kind of public money. Currently, law enforcement agencies, in the absence of a legally established system of traceability of crypto-financial flows and data on identified holders of digital currencies, cannot effectively respond to offenses and crimes committed with their use (Government of the Russian Federation, 2022). It is likely that we will soon see new subjects in this federal law; it is quite possible that these will be: (1) the organizer of the digital currency exchange system; (2) the operator of the digital currency exchange. It is logical that the organizer of the digital currency exchange system is a large credit institution with a universal license and a modern, convenient website. A digital currency exchange operator is ideally a legitimate trade organizer—a large exchange (Government of the Russian Federation, 2022). We consider it important to clarify that all hardware and software complexes

Transformation of Settlement Relations in the Context of Industry 4.0: Conversion of. . .

should also be located in the Russian jurisdiction (Russian Federation, 2020; Inshakova et al., 2020; Kalinina et al., 2019). We are against such tolerance in this segment of investment relations. We believe that foreign legal entities should not be allowed to enter the domestic market during at least the first five years of working out the mechanisms of organizing the circulation of digital currencies (Central Bank of the Russian Federation, 2022a; Kommersant, 2022). In this regard, we support the proposals of D. E. Matytsin that private investors wishing to make investment transactions in the information space must first undergo training and certification. Individual certification of a citizen—a private investor should be completed by assigning them a code from the All-Russian Classifier of Types of Economic Activity2 as an individual entrepreneur who systemically makes investment transactions on the Internet. According to the results of these legally significant events, a special service should be opened for a citizen—a private investor on the portal “Public Services” in their personal account. Such a service should provide access to investment offers and remote interaction with the organizer of the digital currency exchange system, as well as with the operator of the digital currency exchange. Moreover, a citizen—a private investor should be issued a single qualified electronic signature, permanently stored in the Internet cloud on the same portal “Public Services” (Matytsin, 2022a; Matytsin, 2022b).

4

Conclusion

It is proposed to introduce fines for organizing the issuance or turnover of private cryptocurrencies within Russia for individuals for 300–500 thousand rubles and for accepting payments in private cryptocurrencies—30–50 thousand rubles. In these cases, the fine for legal entities may range from 700 thousand to one million rubles for violating the established requirements. Freedom of will and independent decentralized building of relations between entities using blockchain to achieve their private material interests have demonstrated a very useful and socially significant result. The country gratuitously received a viable legal structure, proven by a decade. This design is based on information computer technologies and is quite suitable for creating a public and generally binding settlement instrument—a digital monetary unit of any contemporary jurisdiction. Acknowledgments The research is carried out with the financial support of the Russian Academy of Sciences in the framework of the scientific project № 20-18-00314 “Transformation of public relations in the context of Industry 4.0: legal prevention”.

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References Arbitration Court of the City of Moscow. (2018). The definition in case No. A40-124668/17-71-160 F (dated March 5, 2018). Moscow, Russia. Accessed March 10, 2022, from https://www.garant.ru/ files/6/0/1184806/opredelenie_arbitragnogo_suda_goroda_moskvi_ ot_5_marta_2018_g__po_delu___a40-12466817-71-160_fe.pdf Central Bank of the Russian Federation. (2022a, February, 15). The Bank of Russia and market participants launched the testing of the digital ruble platform and successfully completed the first digital ruble transfers between individuals. Accessed March 10, 2022, from https://cbr.ru/eng/press/event/?id=12692 Central Bank of the Russian Federation. (2022b). Cryptocurrencies: Trends, risks, measures. Report for public consultation. Moscow, Russia. Accessed March 10, 2022, from http://www.cbr.ru/content/ document/file/132241/consultation_paper_20012022.pdf Federal Financial Monitoring Service (Rosfinmonitoring). (2014, February 6). Information message “On the use of cryptocurrencies”. Accessed March 10, 2022, from https://www.fedsfm.ru/news/957 Goncharov, A. I., & Inshakov, A. O. (Eds.). (2020). Objects of civil rights: A textbook for universities (2nd ed.). Urait. Government of the Russian Federation. (2022, February 8). The concept of the Government of the Russian Federation of legislative regulation of mechanisms for organizing the turnover of digital currencies. Accessed March 10, 2022, from http://government.ru/news/44519/ Inshakova, A. O., Goncharov, A. I., & Ershova, I. V. (2020). Digital blockchain registration of legally significant stages of complex good’s export-import supplies by business entities of the EAEU and BRICS jurisdictions. In A. O. Inshakova & E. I. Inshakova (Eds.), Competitive Russia: Foresight model of economic and legal development in the digital age (pp. 328–336). Springer. https://doi. org/10.1007/978-3-030-45913-0_37 Inshakova, A. O., Goncharov, A. I., & Kazachenok, O. P. (2018). The imperatives of financial policy in the sphere of the digital economy: Impacts on increasing investment activity and tax potential of Russian regions. Proceedings of the CSSDRE 2018: International Scientific Conference “Competitive, sustainable and secure development of the regional economy: Response to global challenges” (pp. 337–342). Amsterdam, Netherlands: Atlantis Press. https://doi. org/10.2991/cssdre-18.2018.71. Kalinina, A. E., Inshakova, A. O., & Goncharov, A. I. (2019). Polysubject jurisdictional blockchain: Electronic registration of facts to reduce economic conflicts. In E. G. Popkova (Ed.), Ubiquitous computing and the internet of things: Prerequisites for the development of ICT (pp. 205–213). Springer. https://doi.org/10. 1007/978-3-030-13397-9_24 Kommersant. (2022, February 18). The Central Bank of the Russian Federation has developed a bill banning the issuance and turnover of cryptocurrencies in the country. Accessed March 10, 2022, from https://www.kommersant.ru/doc/5226834 Matytsin, D. E. (2022a). Digital technologies of the Bank of Russia for regulating investment relations. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 227–240). Springer. https://doi.org/10. 1007/978-981-16-4621-8 Matytsin, D. E. (2022b). Features of the legal infrastructure of the turnover of investment objects in the Russian Federation. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 241–249). Springer. https://doi.org/10.1007/978-981-164621-8 Ministry of Finance of the Russian Federation. (2002). Regulations Accounting “Accounting and financial investments” PBU 19/02 (approved by Order No. 126n on December 10, 2002, as amended by Orders No. 116n on September 18, 2006, No. 156n on November

46 27, 2006, No. 132n on October 25, 2010, No. 144n on November 8, 2010, No. 55n on April 27, 2012, No. 57n on April 6, 2015). Moscow, Russia. Accessed March 10, 2022, from https://minfin. gov.ru/ru/perfomance/accounting/accounting/legislation/positions/? id_39=2278-polozhenie_po_bukhgalterskomu_uchetu_uchet_ finansovykh_vlozhenii_pbu_1902 Russian Federation. (2003). Federal Law “On currency regulation and currency control” (December 10, 2003 No. 173-FZ, as amended on

D. E. Matytsin et al. July 2, 2021, and 01.01.2022). Moscow, Russia. Accessed March 10, 2022, from http://www.consultant.ru/document/cons_doc_ LAW_45458/ Russian Federation. (2020). Federal Law “On digital financial assets, digital currency and on amendments to certain legislative acts of the Russian Federation” (July 31, 2020 No. 259-FZ). Moscow, Russia. Accessed March 10, 2022, from http://www.consultant.ru/docu ment/cons_doc_LAW_358753/

Possibilities and Threats of Digitalization for Society Nataliya A. Tovma , Irina A. Maslova , Liudmila V. Popova Seidildayeva, and Inna V. Mishchenko

Abstract

The important task is to provide access to all participants to electronic platforms and services and also expand the bandwidth of communication and telecommunications systems. Digital model of economic development implemented by modern economic systems is contradictory. Like all models that were previously implemented throughout the history of the world economy, the modern model not only opens up new prospects for socioeconomic development, but is also associated with certain risks that need to be managed. Contribution to the literature lies in the fact that the article has formed an innovative systemic vision of cause-and-effect relationships. Keywords

Digitization · Digital services · Digital dividends · New business models · Cybersecurity

can raise the level of life of a citizen and create comfortable conditions for their survival and the opportunities for selfrealization of each person. According Barmuta et al. digitalization will become the basis for sustainable production growth, improving the population’s competitiveness and living standards (Barmuta et al., 2020). Ignoring the existing benefits provided by technological progress and financial and technical innovations, the digitalization of the economy carries risks and threats. Beknazarov et al. notes, that the identification of potential threats, and their accounting in the development of economic development strategies will allow ensuring a stable functioning of the economy (Beknazarov et al., 2020). Questions of society were discussed by such scientists as Barmuta et al. (2020), Beknazarov et al. (2020), Gueyffier et al. (1999), Moskvitina (2020), Idrysheva et al. (2019), and Korostelkina et al. (2020). However, some issues remained unexplored.

1.1 JEL Code

O31

1

Introduction

The digital economy allows an ordinary consumer to get the necessary services, buying products or purchasing services in online stores at a better price and lower costs. Digitization N. A. Tovma (✉) Al-Farabi Kazakh National University, Almaty, Kazakhstan I. A. Maslova · L. V. Popova Orel State University named after I.S. Turgenev, Orel, Russia A. K. Seidildayeva Academy of Civil Aviation, Almaty, Kazakhstan I. V. Mishchenko Altai State University, Barnaul, Russia

, Ashirgul K.

Methodology

The important task is to provide access to all participants to electronic platforms and services and also expand the bandwidth of communication and telecommunications systems. As noted by Idrysheva et al. in the article “Marketing communications in the digital age,” digitization frees a person from routine operations, allows them to engage in strategies (Gueyffier et al., 1999; Idrysheva et al., 2019; Moskvitina, 2020). Small businesses worldwide turn into “micro-multinational companies.” Currently, 86% of startups have some form of business connections outside the country of residence, thus opening up new markets for themselves.

2

Results

The economic and social benefits from digitization are presented in Fig. 1.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_9

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Fig. 1 Economic and social benefits from digitization. Source: Developed by the authors

The effect of digitization

Social

Economic

Reducing the level of crime, increasing the availability of financial services and road safety

Social contribution to economic growth Growth of working places

The rise of inclusive economics

The growth of labor productivity

Reduction of negative impact on the environment

Acceleration of growth rates for small Increasing the availability of quality medical care

The growth rate of growth for medium-sized businesses Creation of new sectors of the economy

Reduction of poverty Automation and intensification of traditional economic and technological processes

The development of infrastructure and the reduction of the cost of processing, storage, and transfer of data will bring humanity to the threshold of a new, large-scale stage of the digital revolution, a characteristic feature of which is the merger of online and offline (Korostelkina et al., 2020; Sharapiyeva et al., 2019; Tovma et al., 2020). The small growth of subscribers is explained by the lack of coverage in exceptionally remote areas. Among the factors that determine the need for digitalization of the economy, the following should be mentioned in the first place. A person needs to satisfy their vital needs. With this purpose, they have created and constantly developed the system of economic activity, which must meet the existing and emerging needs and resource opportunities. The three main factors are: the previous system of education, cultural features, and the vision of the government in relation to ICT (Fig. 2). Together with that, the digital economy raises serious problems. Moreover, there might occur a loss of information sovereignty: data about citizens is collected through global social networks and not by national companies. Key technologies will be concentrated in the hands of several influential corporations, allowing them to dictate their market conditions. Inequality can grow to such an extent

that the benefits from the previous changes will be concentrated among a relatively small elite. Moreover, the life expectancy of enterprises may reduce even further: for the last 50 years, the average term of existence of the company was reduced from 60 to 18 years. Risks and threats of digitization are shown in Table 1. So, the following risks and threats of digitization were found. State: Imposed borrowing of western technologies, rapid degradation of own capabilities; destruction of traditional mechanisms of state management and regulation. Political risks: new vulnerabilities related to tracking, leakage of personal data, and loss of secrets of personal life; the takeover of the domestic market by powerful multinational companies. Production risk: further reduction of life expectancy of enterprises. Personnel risk: search for qualified specialists. The risk of corruption: when corrupt persons “go” into virtual reality, they can use material benefits anonymously, without disclosing their identity. The risk of digital degradation: digital degradation can lead to brain degradation and weakness. In our opinion, the risks that do not include digital technologies in themselves can be classified into state, political, technological, and cybersecurity risks, risks of digital totalitarianism, production risks, and corruption risks.

Fig. 2 Factors vision. Source: Authors

Factors

Internal (management factors)

the effectiveness of corporate governance

Foreign (socio-economic factors)

the stability of the economic situation;

Possibilities and Threats of Digitalization for Society

49

Table 1 Risks and threats of digitization No. 1

A sign State

2

Political risks

3 4 5

Production risk Personnel risk The risk of corruption

6

The risk of digital degradation

Types of risk – Imposed borrowing of western technologies, rapid degradation of own capabilities; – Destruction of traditional mechanisms of state management and regulation; – New vulnerabilities related to tracking, leakage of personal data, and loss of secrets of personal life; the takeover of the domestic market by powerful multinational companies; – Further reduction of life expectancy of enterprises; – Search for qualified specialists; – When corrupt persons “go” into virtual reality, they can use material benefits anonymously, without disclosing their identity; – Digital degradation can lead to brain degradation and weakness.

Source: Developed by the authors

3

Conclusions

So, digital model of economic development implemented by modern economic systems is contradictory. The following risks and threats of digitization were found: state, political risks, production risk, personnel risk, the risk of corruption and the risk of digital degradation. Like all models that were previously implemented throughout the history of the world economy, the modern model not only opens up new prospects for socio-economic development, but is also associated with certain risks that need to be managed. Its contribution to the literature lies in the fact that the article has formed an innovative systemic vision of cause-and-effect relationships. Acknowledgments The article was written within the framework of grant financing of young scientists for the Ministry of Education and Science of the Republic of Kazakhstan under the project AP09057847 “Formation and development of the knowledge economy in the context of digitalization of the Republic of Kazakhstan: conceptual foundations and prospects for implementation.”

References Barmuta, K. A., Akhmetshin, E. M., Andryushchenko, I. Y., Tagibova, A. A., Meshkova, G. V., & Zekiy, A. O. (2020). Problems of business processes transformation in the context of building digital

economy. Entrepreneurship and Sustainability Issues, 8(1), 945–959. https://doi.org/10.9770/jesi.2020.8.1(63) Beknazarov, B., Niyazbekova, R., Amirseitov, U., Kokenova, A., Daurbayeva, M., & Aitkazina, M. (2020). Development of entrepreneurship and forms of self-employment in the innovative sectors of the economy. Entrepreneurship and Sustainability Issues, 8(2), 209–228. https://doi.org/10.9770/jesi.2020.8.2(13) Gueyffier, D., Li, J., Nadim, A., Scardovelli, R., & Zaleski, S. (1999). Volume-of-fluid interface tracking with smoothed surface stress methods for three-dimensional flows. Journal of Computational Physics, 152(2), 423–456. https://doi.org/10.1006/jcph.1998.6168 Idrysheva, Z., Tovma, N., Abisheva, K.-Z., Murzagulova, M., & Mergenbay, N. (2019). Marketing communications in the digital age. E3S Web of Conferences, 135, 04044. https://doi.org/10.1051/ e3sconf/201913504044 Korostelkina, I., Dedkova, E., Varaksa, N., & Korostelkin, M. (2020). Models of tax relations: improving the tax culture and discipline of taxpayers in the interests of sustainable development. E3S Web of Conferences, 159, 06014. https://doi.org/10.1051/e3sconf/ 202015906014 Moskvitina, E. I. (2020). Developing the basis of the matrix model of the regional innovation subsystem. Regional Economics: Theory and Practice, 18(11), 2183–2204. https://doi.org/10.24891/re.18.11. 2183 Sharapiyeva, M. D., Kunanbayeva, D., Nurseiytova, G., & Kozhamkulova, Zh. (2019). Energy efficiency of transport and logistics infrastructure: The example of the Republic of Kazakhstan. International Journal of Energy Economics and Policy, 9(5), 331–338. Accessed March 15, 2022, from https://www. econjournals.com/index.php/ijeep/article/view/8204 Tovma, N., Kazbekova, K., Abisheva, K.-Z., & Nurgaliyeva, A. (2020). Modern trends of development of electronic trade in the conditions of digital economy. E3S Web of Conferences, 159, 04022. https:// doi.org/10.1051/e3sconf/202015904022

Integration into Global Value Chains as a Driver of High Technology Exports Development in China Natallia S. Shalupayeva Leonovich

, Halina A. Shmarlouskaya

, and Aleksandr N.

Abstract

JEL Codes

The paper aims to understand the role of global value chains in China’s high technology exports development and to identify main problems and challenges associated with it. It is proven that change of the Chinese economic model from an export- and investment-driven economy to a demand- and innovation-driven one has significant implications for the pattern of its integration into global value chains. Using the experience of participation in global value chains of foreign multinational enterprises, China has now developed more complex domestic supply chains, which caused the decrease in its trade intensity in global value chains. The development of GVCs contributes to an increase in the positive foreign trade balance in the category of of high-tech products. One of the most significant role in the modern system of international production is played by the Chinese economy. Chinese economic model transition from an export- and investment-driven economy to a demand- and innovationdriven one has significant implications for the pattern of its integration into GVCs. As a result of China’s domestic value chains development, its trade intensity in GVCs has fallen. So, the decrease in the share of China’s imports of intermediate goods and services demonstrates a shift away from production to meet foreign consumption towards domestic demand.

F10 · F14 · L52 · O00 · O25 · O30

1

Introduction

In modern world economy, GVCs generate about 80% of international trade flows, determine the countries’ competitiveness, their investment environment, role in the international division of labor and the world reproduction process. However coronavirus lockdown provoked a lot of restrictions to the development of GVCs, which forced the countries to rethink their dependence on foreign production. The restructuring of GVCs architecture and the trade war with the United States creates a number of challenges and risks for China’s exports development, especially in high tech sphere. Moreover, nowadays, its economic model, based on cheap labour, inward foreign direct investment (FDI) and foreign technologies, loses its effectiveness. In 2020, China starts implementing a new economic model, named «dual circulation strategy», aimed at increasing China’s domestic demand and national innovation capacity (Zhang, 2020). The paper aims to understand the contribution of GVCs into China’s high technology exports development and to identify main problems and challenges associated with it.

Keywords

Global value chain · Exports · High-tech technology products · FDI · Global value chains · Processing trade

N. S. Shalupayeva (✉) Belarusian State University, Minsk, Belarus H. A. Shmarlouskaya · A. N. Leonovich Belarus State Economic University, Minsk, Belarus

2

Method

The latest studies on China’s participation in GVCs include the following researches. Xing (2022) studied the changes in GVCs development caused by the China–USA trade war and the COVID-19 pandemic (Xing, 2022). Yu et al. (2022) explored if participation in the ASEAN-China regional value chains affected China’s manufacturing enterprises’ positions in GVCs (Yu et al., 2022). Cho and Lim (2022) were the first to quantitatively estimate the effect of the US

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_10

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decoupling policy on GVCs development (Cho & Lim, 2022). Putri and Hudaya (2021) examined China’s participation in GVCs (Putri & Hudaya, 2021). Wolszczak-Derlacz and Lu (2022) analised the role of the One-Belt One-Road initiative in China’s exports development and its participation in GVCs (Wolszczak-Derlacz & Lu, 2022). Chen and Xing (2022) measured the dependence of China’s economy on the GVCs under the dual circulation strategy implementation. The authors proofed that the external dependence of Chinese industries was quite different with the highest degree in the high-tech industry (Chen & Xing, 2022). Qian et al. (2021) investigated how GVCs participation affected innovation efficiency in China’s provinces (Qian et al., 2021). The latest studies on China’s high technology products exports development are summarized as follows. Han (2010) and Zhao and Yang (2012) realised an empirical analysis of its innovation capability. Xiong and Qureshi (2013) substantiated that foreign-led processing trade was one of the most important factors stimulating China’s rapid economic growth. Grimes and Sun (2014) investigated the dependence of China’s economy on foreign technology. Wang and Wang (2020), Hammer and Yusuf (2020), Wang et al. (2021, b) studied theoretical issues and difference between smart and intelligent manufacturing. Wang et al. (2021, b) concluded that industrial agglomeration was an important factor in increasing the China’s exports complexity. When studying international trade within the framework of the GVCs and assessing the degree of international production fragmentation, the approach to accounting the international trade in terms of value added, implemented in the international database TiVA (66 countries and 45 industrial activities for the period 1995–2018), was used.

3

Results

COVID-19 pandemic and USA-China trade war has provoked global concerns about dependence on global supply chains. Chinese economic model transition from an exportand investment-driven economy to a demand- and innovation-driven one has significant implications for the pattern of its integration into GVCs. The latest OECD data suggests that China’s increasingly service-oriented economy

is shifting from an economic model based on imports of components to stimulating development based on domestic production. The data in the Table 1 shows that in 2005 foreign content of China’s exports accounted for about 24%, and in 2018— only 17.2% (significantly below the OECD average of 27.9%). On the contrary, the China’s forward participation in GVCs increased from 15.6 to 19.3% during this period. It is a good trend as it was proofed that forward GVC linkages are more characteristic of countries specializing in more complex operations (Kummritz, 2016). This fact shows that China’s economy is progressively going up the GVCs. During the past decades, China became an important hub in traditional trade and simple GVCs trade, even though USA and Germany still remain the most important hubs in complex GVC (Li et al., 2019). Thanks to innovation and industrial policies implementation, enormous market and investment in industrial capacity, China gradually increased its share in the world’s production. Nowadays it accounts for 20% of all goods production in GVCs, up from 4% in 1995 (McKinsey Global Institute, 2019). Nowadays China produces almost half of global gross output in such industries as glass, cement, and ceramics; textiles and apparel; electrical machinery; and more that 40%—in basic metals; computers and electronics (McKinsey Global Institute, 2019). At the same time the China’s GVCs participation index is decreasing (Table 1). This is natural, because as a rule, economies become more self-sufficient as they grow. In the case of China, it can be explained by the rising domestic demand and the creation of domestic value chains in the country. In addition, China, thanks to playing a significant role in high-tech GVCs, became the global largest base for high-tech manufacturing. The results of the research realized by Piermartini and Rubínová (2021) proofed that GVCs boosted innovation by 5% both in developed and developing economies, both by forward and backward GVC linkages (Piermartini & Rubínová, 2021). Among the reasons for these changes, it seems appropriate to cite the following: – internationalization of R&D, which is expressed in the trend of transferring by MNEs their innovative activity, which was previously based in parent firms, to FDI host countries by creating research centers and technology

Table 1 Indicators of China’s participation in GVCs, % Indicator Forward participation in GVCs Backward participation in GVCs GVCs participation index Source: Compiled by the authors

2005 15.6 23.7 39.3

2007 16.9 22.1 39

2009 16.2 17.2 33.4

2011 17.9 20.5 38.4

2013 17.2 18.9 36.1

2015 18.1 15.9 34

2017 18.9 17.0 35.9

2018 19.3 17.2 36.5

Integration into Global Value Chains as a Driver of High Technology Exports. . . Table 2 High-technology exports by countries Country name Value (million current USD) China Hong Kong SAR, China Germany United States Korea, Rep. Singapore France Japan Vietnam Netherlands Percentage (% of manufactured exports) Hong Kong Philippines Singapore Malaysia Vietnam Iceland Korea, Rep. China Malta Kazakhstan

2018

2019

731,890,6 330,093,8 210,082,3 156,037,1 192,789,7 155,446,5 117,814,4 111,020,4 82,613,4 85,690,6

715,843,5 322,038,8 208,677,8 156,074,1 153,561,2 150,958,8 120,897,0 104,042,0 90,436,1 87,120,6

64.7 61.3 51.8 53.3 40.8 23.5 36.4 31.5 33.2 23.5

65.6 62.2 52.1 51.8 40.4 38.1 32.4 30.8 29.8 29.8

Source: Compiled by the authors

parks, scientific laboratories, long-term strategic alliances, as well as by merges and acquisitions of local firms with high innovative potential; – development of outsourcing, including knowledge outsourcing, which has led to a large-scale relocation of a number of industries, including high-tech ones, from developed economies with high labor costs to developing ones, where there are potential large markets and much cheaper labor force (according to Gartner, in the 2010s, outsourcing accounted for more than 50% of the global information technology services market);

53

– rapid development of knowledge-intensive industries in China, India, Singapore, South Korea under the influence of globalization and capital transnationalization (Shalupayeva, 2021). According to international reports, in 2009, China surpassed the USA, the European Union and Japan by high-tech products exports (Table 2). The most important problem is the low levels of product diversification (Shmarlouskaya et al., 2022). If compared with other countries of the world by the share of ICT goods in the total merchandise exports, China ranks sixth, after Hong Kong, Philippines, Vietnam, Malaysia and Singapore (Fig. 1). Playing a significant role in high-tech GVCs, China is mostly assembling products made up of high-tech components imported from abroad. The majority of these exports are produced by foreign-invested enterprises functioning in China. At the same time the world trade statistics account total values of the assembled products to China, which greatly overestimates its exports. Grimes and Sun (2014) and Xing (2014) proof it. But nowadays the situation is changing. China, using its experience of participation in GVCs, has now developed more complex domestic value chains. China is building new industrial capacity and modernizing existing industries at the same time. Sector of computers and electronics, in which China first emerged as a platform for low-cost assembly and re-export, is a good example. GVCs in the sectors of computers and electronics are ones of the most valuable, knowledgeintensive and trade intensive (McKinsey Global Institute, 2019). And now China is developing its own capacities to produce components, that it previously imported from developed economies. For example, in 2017, Xiaomi launched a

60 50 40 2010

30

2015 20

2019

10 0 Hong Kong Philippines Vietnam SAR, China

Malaysia Singapore

China

Korea, Rep.

Macao SAR, China

Fig. 1 Rank of countries by ICT goods exports in 2019 (% of total). Source: Compiled by the authors

World

54

N. S. Shalupayeva et al.

50

internationalization of R&D; development of outsourcing, including knowledge outsourcing; rapid development of knowledge-intensive industries in China, India, Singapore, South Korea under the influence of globalization and capital transnationalization. However the COVID-19 pandemic, the USA–China trade war have revealed the fragility and provoked restrictions to GVCs development, which forced the countries to rethink their dependence on international production. The restructuring of GVCs architecture creates a number of challenges and risks for China’s exports development, especially in high technology sphere. 2. One of the most significant role in the modern system of international production is played by the Chinese economy, for which, in turn, integration into the GVCs has become an important engine of economic development. More and more countries, especially in the Asian region, have become heavily dependent, directly or indirectly, on China’s value-added supply. 3. Chinese economic model transition from an export- and investment-driven economy to a demand- and innovationdriven one has significant implications for the pattern of its integration into GVCs. Nowadays China’s increasingly service-oriented economy is shifting from an economic model based on imports of components to stimulating development based on domestic production. China is building new industrial capacity and modernizing existing industries at the same time. Using its experience of participation in GVCs, China has now developed more complex domestic value chains. Sector of computers and electronics, in which China first emerged as a platform for low-cost assembly and re-export, is a good example. 4. As a result of China’s domestic value chains development, its trade intensity in GVCs has fallen. So, the decrease in the share of China’s imports of intermediate goods and services demonstrates a shift away from production to meet foreign consumption towards domestic demand.

40 30 20 10 0 2005

2007

2009

2011

2013

2015

2017

2018

Fig. 2 Re-exported intermediate imports as % of intermediate imports in China. Source: Compiled by the authors

domestic chip under Pinecone, a Xiaomi subsidiary (McKinsey Global Institute, 2019). As a result of China’s domestic value chains development, its trade intensity in GVCs has fallen (Fig. 2). So, the share of imports of intermediate products and services subsequently embodied in exports decreased from 37.7% in 2005 to 26.2% in 2018 (that is significantly below the OECD average of 47.9%). At the same time, the share of China’s domestic value-added in GVCs driven by foreign final demand decreased from 23.7% in 2008 to 14.4% in 2018, demonstrating a shift away from production to meet foreign consumption towards domestic demand. Meanwhile, the values of China’s foreign trade in intermediate products and services are growing in absolute terms (Table 3). Decrease in intermediate trade intensity was observed in computers and electronics. It was caused by the facts that China’s industry became more vertically integrated and more computers and other electronics were sold to Chinese consumers rather than exported.

4

Conclusion

1. The development of GVCs contributes to an increase in the positive foreign trade balance in the category of of high-tech products. Among the reasons for these changes, it seems appropriate to cite the following: Table 3 Trade in intermediate products in China, millions US Dollar Indicator Gross exports of intermediate products Gross imports of intermediate products Source: Compiled by the authors

1995 59,069,9 89,265,6

2000 126,490,7 167,106,3

2005 360,658,5 456,151,8

2010 723,514,9 913,225,1

2015 1,075,531,0 1,361,044,9

2018 1,264,006,8 1,675,248,6

Integration into Global Value Chains as a Driver of High Technology Exports. . .

References Chen, W., & Xing, L. (2022). Measuring the intermediate goods’ external dependency on the global value chain: A case study of China. Sustainability, 14(7), 4360–4380. https://doi.org/10.3390/ su14074360 Cho, J., & Lim, B. (2022). Economic effects of US-China decoupling on global value chain. Korean Academy of International Commerce, 37, 261–280. https://doi.org/10.18104/kaic.2022.37.2.261 Grimes, S., & Sun, Y. (2014). Implications of China’s on-going dependence on foreign technology. Geoforum, 54, 59–69. https://doi.org/ 10.1016/j.geoforum.2014.03.010 Hammer, A. B., & Yusuf, S. (2020). Is China in a high-tech, low-productivity trap? Economic Working Paper Series (Working Paper 2020-07-B). Washington, DC: U.S. International Trade Commission. Han, J. (2010). An empirical analysis on China’s high-tech industry innovation efficiency based on SFA. Studies in Science of Science, 3, 467–472. Kummritz, V. (2016). Do global value chains cause industrial development? CTEI Working Papers series 01-2016, Centre for Trade and Economic Integration, The Graduate Institute. Li, X., Meng, B., & Wang, Z. (2019). Recent patterns of global production and GVC participation. In: Global Value Chain Development Report 2019. Technical innovation, supply chain trade, and workers in a globalized world. World Trade Organization, Geneva, p. 9–44. McKinsey Global Institute. (2019). Globalization in transition: the future of trade and value chains. Accessed January 31, 2023, from https://www.mckinsey.com/featured-insights/innovation-andgrowth/globalization-in-transition-the-future-of-trade-and-valuechains Piermartini, R., & Rubínová, S. (2021). How much do global value chains boost innovation? Canadian Journal of Economics, 54(11). https://doi.org/10.1111/caje.12512 Putri, R., & Hudaya, M. (2021). Reimaging post COVID-19 global value chain: Case study of automotive and electronic companies in China. Global Strategis, 15(2), 255–286. https://doi.org/10.20473/ jgs.15.2.2021.255-286 Qian, F., Hong, J., Fang, T., & She, Y. (2021). Global value chain embeddedness and innovation efficiency in China. Technology Analysis & Strategic Management, 34, 1–15. https://doi.org/10.1080/ 09537325.2021.1947487 Shalupayeva, N. (2021). Exports diversification as a key point of Сhina’s trade strategy. University Economic Bulletin, 50, 96–105.

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Shmarlouskaya, H. A., Shalupayeva, N. S., Babyna, I. V., & Sinyuk, T. Y. (2022). Development of China’s high-tech exports under the implementation of the dual circulation strategy. In Innovative trends in international business and sustainable management (pp. 33–42). Singapore. Wang, B., Tao, F., Fang, X., Liu, C., Liu, Y., & Freiheit, T. (2021). Smart manufacturing and intelligent manufacturing: A comparative review. Engineering, 7(6), 738–757. https://doi.org/10.1016/j.eng. 2020.07.017 Wang, L. Y., & Wang, B. H. (2020). Spatial statistical analysis and comprehensive evaluation of high-tech industry development. Open Journal of Statistics, 10(3), 431–452. https://doi.org/10.4236/ojs. 2020.103028 Wang, J., Ziqi, Z., & Wang, H. (2021). Research on influencing factors of export complexity of Chinese high-tech industry based on big data analysis. E3S Web of Conferences, 235. https://doi.org/10.1051/ e3sconf/202123503013 Wolszczak-Derlacz, J., & Lu, Y. (2022). The role of the One-Belt One-Road initiative in China’s exports and global value chains. Equilibrium, 17(2), 317–341. https://doi.org/10.24136/eq.2022.011 Xing, Y. (2014). China’s high-tech exports: The myth and reality. Asian Economic Papers, 13(1), 109–123. https://doi.org/10.1162/ASEP_ a_00256 Xing, Y. (2022). China and global value chain restructuring. China Economic Journal., 15, 1–20. https://doi.org/10.1080/17538963. 2022.2117198 Xiong, J., & Qureshi, S. (2013). The quality measurement of China high-technology exports. Procedia Computer Science, 17, 290–297. https://doi.org/10.1016/j.procs.2013.05.038 Yu, L., Sun, Y., Liu, X., & Wang, T. (2022). Does regional value chain participation affect global value chain positions? Evidence from China. Economic Research-Ekonomska Istraživanja, 1–22. https:// doi.org/10.1080/1331677X.2022.2108474. Zhang, Z. (2020). What is China’s dual circulation strategy and why should foreign investors take note. Available via China Briefing. Accessed March 15, 2022, from https://www.china-briefing.com/ news/what-is-chinas-dual-circulation-strategy-and-why-should-for eign-investors-take-note/ Zhao, Z., & Yang, C. (2012). An empirical study of China’s high-tech industry innovation capability in transition. In: Rebalancing and Sustaining Growth in China. https://doi.org/10.22459/RSGC.07. 2012.13.

Regional Aspects of Ensuring Security and Development of Entrepreneurship in the Digital Economy Elena V. Karanina

, Asya V. Kotandzhyan

Abstract

The paper aims to identify the main regional aspects of security and the development of entrepreneurship in the digital economy. The authors consider the main threats and risks of digital business transformation for the socioeconomic stability of the region and find possible ways to determine them. The research methodology is represented by the analysis of statistical data, methods of comparative analysis, and economic and mathematical methods for calculating integral safety indicators. The research results will serve as an example for conducting such analytics in relation to studying the socio-economic sustainability of the region in the context of digital transformations of business entities. Keywords

Digital economy · Regional security · Entrepreneurship development · Digitalization · Integral security assessment

1

Introduction

Intensive digitalization, the COVID-19 pandemic in 2020–2021, and globalization necessitated the development of business entities in the direction of expanding possibilities for introducing and using information and communication technologies (ICT). Simultaneously, the stability of the regional socio-economic system has become subject to new threats and risks from the negative consequences of technological breakthroughs and lagging behind global business development trends. The study of K. Alam and co-authors confirms that, at present, business entities most quickly and effectively

E. V. Karanina (✉) · A. V. Kotandzhyan · Y. Y. Domenko Vyatka State University, Kirov, Russia e-mail: [email protected]; [email protected]; [email protected]

, and Yuri Y. Domenko

respond to emerging internal and external threats through the elements of the digital economy (Alam et al., 2018). The digital environment in the understanding of business entities implies not only the use of new tools in managing business processes (Karanina & Kotandzhyan, 2021) but also fundamentally new methods of running a business, overcoming geographic and informational barriers, cost reduction, expanding product distribution channels, and improving the quality of manufactured goods and services provided through the introduction of elements of artificial intelligence and machine learning into production (Kruglov & Amelchenko, 2020). Effective development of digital entrepreneurship is possible only if there is an appropriate regional infrastructure that can withstand new challenges and threats to the stability and development of the region and is ready for fundamentally new directions for the development of entrepreneurial structures. The paper aims to analyze the main regional indicators of development in the digital direction on the example of the Kirov Region, as well as to prepare conclusions and recommendations for improving the regional infrastructure in the context of digitalization.

2

Materials and Method

The studies conducted by the following authors confirm the role of digitalization factors in regional socio-economic development, ensuring the security and competitiveness of economic entities and the region: Arbuzov and Arbuzova (2019), Denisenko (2018), Karanina and Kotandzhyan (2021), Klimentyeva and Ilina (2021), Kovalchuk et al. (2021), Nowak et al. (2021), Popov et al. (2020). Determining the level of economic security and sustainability of regional development based on the indicator approach and comparing statistical indicators are also reflected in the works of Davydova (2019), Karanina and

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_11

57

58

Vershinina (2016), Kozachenko et al. (2019), Shvaiba (2020), Yakovenko and Ten (2021). Changes that have affected all subsystems of the socioeconomic development of the region, indicated by the processes of digital transformation, bring new opportunities, prospects, risks, and threats to the system of economic security of the region, large cities, and business representatives. Simultaneously, sustainable development of the country’s subjects depends on changing present conditions. The authors understand sustainable development of territories as the ability to stable functioning under external influences and adaptability to them (Surnina & Shishkina, 2020), which can also be correlated with ensuring economic security at the regional level. The development of information technologies and their implementation in the infrastructure of regions largely determine the competitiveness of the regional economy and business entities and the level and quality of life of the population. The study by Dolbnya et al. (2021) showed that the digital transformation of regions contributes to effective regional development, the leading tool of which is digital innovation. Simultaneously, the researchers noted that regions characterized by active development of innovative processes most actively follow the path of digitalization. State projects regulate the introduction of innovations in various areas of the socio-economic system of the region, goals, objectives and planned results of digitalization, and methods of legal regulation of project implementation. Data on the positive impact of factors of digitalization of the regional economy on economic security was obtained by Vlasov (2020), who also pointed out a stable direct relationship between the following factors in the development of the digital economy: • • • •

Costs for information and communication technologies; Investment in fixed capital for technical equipment; Number of organizations that use the Internet; Share of population who use the Internet to order goods, works, or services; • GRP per capita. Popov et al. (2020) substantiated the socio-economic effects of introducing digital technologies based on analyzing an impressive amount of data. They concluded that the digital transformation would lead to several positive socio-economic consequences, including the following: • Implementing socially useful business processes; • Improving the quality of services to the population; • Improving access to and quality of medical and educational services; • Increasing attractiveness of the city for investment; • Ensuring migration influx of highly skilled labor force;

E. V. Karanina et al.

• Improving the ecological situation in the region and the city, saving natural resources; • Increasing number of start-ups and science-intensive industries; • Raising social self-awareness of citizens. In her study of the impact of the digitalization process on the development of the regions of Bulgaria, O. Mancheva-Ali notes two directions of the contribution of digitalization to the economy: • Contribution to the production sector, export operations, and employment of the population; • Growth of productivity and competitiveness of the region. Simultaneously, the key indicators are also achieved as a result of new services that provide convenience and speed in obtaining necessary information and satisfying user requests (Mancheva-Ali, 2021). However, in addition to positive effects, the digitalization of business structures in the region is characterized by several possible threats to sustainable development, including the following: • Growing unemployment due to the disappearance of certain professions and even industries; • Using ICT for tax evasion, illegal transactions, uncontrolled transfers using cryptocurrencies; • Development of cybercrime; improvement of cyber fraud technologies. The possibility of the realization of these threats suggests that the process of digitalization of the region and business structures should have a legal basis, be carried out under the control of state structures, and meet the needs of a particular subject of the country. Determining the readiness of the region’s infrastructure for digital development and identifying declining indicators, potential threats, and risks are important elements in ensuring sustainable development at the current stage of the implementation of new strategies.

3

Results

Based on open data from federal statistics, the authors selected the indicators that characterize the digital maturity (readiness) of economic entities in the region to transition to new economic realities. The authors analyzed and compared the data for 2016–2020 for the Kirov Region and the Russian Federation (Table 1).

Regional Aspects of Ensuring Security and Development of Entrepreneurship in the. . .

59

Table 1 Indicators characterizing the digital maturity of the region

К1 (%) The Russian Federation The Kirov Region К2 (%)

2016 81.8 82.9 2016

2017 83.2 85.5 2017

2018 86.5 87.9 2018

2019 86.6 91.3 2019

2020 93 94.6 2020

The Russian Federation

45.9

47.4

50.9

51.9

44.3

The Kirov Region

39.2

39.4

33.2

45.5

36.5

Costs for implementing and using digital technologies (thousand rubles) The Russian Federation The Kirov Region К3 (%) The Russian Federation The Kirov Region К4 (%)

2016

2017

2018

2019

2020

1,249,224,758 2242436.40 –

2016

1487638589.10 3015506.10 2017 to 2016 19.08494285 34.47454296 2017

1676161289.20 2968743.20 2018 to 2017 12.67261427 -1.550747982 2018

2316831416.50 4822968.30 2019 to 2019 38,22,246,292 62.45825169 2019

2472598471.70 4138576.30 2020 to 2019 6.723279652 -14.19026536 2020

The Russian Federation The Kirov Region

41.6 35.1

41.2 35

42.2 34.2

43.3 40.2

40.6 37.9

Growth rate for 5 years (%) 13.69193154 14.11338963 Growth rate for 5 years (%) 3.48583878 6.887755102 Growth rate for 5 years (%) 97.93% 84.56%

Growth rate for 5 years (%) -2.40 7.98

Source: Compiled by the authors based on (Federal State Statistics Service of the Russian Federation, 2022)

One of these indicators is the “Share of organizations using broadband access to the Internet in the total number of organizations” (K1). The next indicator for analysis is the “Share of organizations that had a website on the Internet in the total number of organizations” (K2). An important characteristic of the digital readiness of economic entities and the region is the “Costs for the implementation and use of digital technologies.” For comparison with the average Russian indicator in terms of costs for the implementation and use of digital technologies, the authors used the indicator “Growth rate of costs for the implementation and use of digital technologies” (K3). The last criterion for the analysis was the indicator “Share of organizations using the Internet to place orders for goods (works or services) in the total number of organizations” (K4). The analysis of data is presented in Table 1. According to the presented data, we can note that the vast majority of organizations in the Kirov Region have broadband access to the Internet, while their share in the total number of organizations grew by more than 14% over five years. According to this criterion, the Kirov Region is ahead of the average Russian indicator, although the average Russian indicator shows an increase of 13.69% over the reviewed period.

According to the presented data, it is seen that according to this indicator, the Kirov Region lags behind the national average. Simultaneously, the data for the region have a negative growth rate, namely, the share of organizations that had a website on the Internet in the total number of organizations decreased by 6.89%. In Russia, the indicator decreased by 3.48%. This fact can be partly explained by the fact that organizations currently prefer creating an official application for smartphones and similar gadgets to a website. We see a decrease in the growth rate of costs for implementing and using digital technologies in the Kirov Region by 14% in 2020 compared to 2019. Nevertheless, the overall level of costs over the five years under review increased by 84.56%. According to the presented data, it should be noted that in 2017 and 2019, the indicators of the Kirov Region were ahead of the growth rate of costs for introducing digital technologies compared to the national level. However, in 2018 and 2020, there was a significant lag. The presented data show that the share of organizations using the Internet to place orders for goods (works or services) in the total number of organizations in the Kirov Region lags behind the average Russian indicator, but their share increased by 7.98% over the period under review.

60

E. V. Karanina et al.

Table 2 Normalized indicators for the selected indicators for the Kirov Region and the Russian Federation

Normalized indicator The Kirov Region 1 0.27 0.73 0.61

Criterion К1 К2 К3 К4

The Russian Federation 1 0 1 0

Source: Compiled by the authors

The sum of normalized values is used to determine the integral indicator of the digital maturity of economic entities in the region (Karanina & Kotandzhyan, 2021). Since all the found indicators of the information and digital development of the region are stimulating, the following formula will be used to determine the normalized values: Yn =

xi - xmin xmax - xmin

ð1Þ

where: xi—the value of the indicator for a certain year; xmin—the minimum value of the indicator for the reviewed period in the region; xmax—the maximum value of the indicator for the reviewed period in the region. The normalized indicators for the selected indicators for the Kirov Region and the Russian Federation are presented in Table 2. N

Xe =

n=1

Yn ð2Þ

N

where: N n=1

Y n —the sum of normalized indicators for all consid-

ered criteria; N—the number of criteria. According to the calculations, the integral indicator for the Kirov Region was 0.65; for the Russian Federation, it was 0.5, which, following the scale of the level of the state of the digital maturity of the region (Fig. 1), corresponds to a satisfactory state and requires the organization of measures to increase and maintain the level of the regional security.

0.00–0.20 critical

0.21–0.40 crisis 0.71–0.90 normal

0.41–0.70 satisfactory 0.91–1.00 stable

Fig. 1 Scale of the level of the state of digital maturity. Source: Compiled by the authors based on (Klimentyeva & Ilina, 2021)

The definition of the state of digital maturity of the region and the country as satisfactory corresponds to reality, given that the analysis was carried out for 2016–2020. This period is characterized by the entry of the country and its individual regions on the path of digitalization and the preparation and improvement of infrastructure to achieve the intended goals and programs. The active development and launch of the digital financial environment took place at the end of 2019 and 2020 due to the spread of restrictive measures, which served as an impetus for the transition to new realities of life and pushed business entities to digitalize business processes. As of the end of 2021, the Russian Federation is one of the leaders in providing remote services to the population (as part of organizing the activities of state structures), on the digitalization of the banking environment, the emergence of new financial and technological institutions, the development of urban digital infrastructure, and the use of new technologies in education. Thus, it is necessary to expand the list of indicators of digital maturity. It is also necessary to conduct a deeper analysis at the present stage of development. Thus, it is possible to analyze the indicators of readiness for digitalization of Russian regions, compare them with the average indicators for the country or within the districts, and derive an integral indicator that reflects the level of regional security in a digital aspect. The presented criteria can be expanded and supplemented with suitable indicators; normalized indicators can be derived based on data from federal districts.

4

Conclusion

The development of entrepreneurship in the direction of digitalization and the creation of new business models and methods of doing business should take place with the readiness of the subject of the country (region, district) for such transformations and ensuring the safety of innovations, as well as assessing the impact of digital processes on the socioeconomic stability of the region. This research is the beginning of studying the relationship between the development of the digital economy of the region and its sustainable development. As a result, we can draw conclusions about the need for further transformations in the framework of the digitalization of business structures, solving practical issues of

Regional Aspects of Ensuring Security and Development of Entrepreneurship in the. . .

realizing the digital potential in the regional economy, developing business activity of business entities, and identifying ways to stimulate digital processes in the economy. Acknowledgments The article was prepared with the support of the grant of the President of the Russian Federation NSh5187.2022.2 for state support of the leading scientific schools of the Russian Federation as part of the research topic “Development and justification of the concept, the complex model of resilience diagnostics of risks and threats to the security of regional ecosystems and the technology of its application on the basis of the digital twin.”

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Transportation Research Procedia, 54, 58–63. https://doi.org/10. 1016/j.trpro.2021.02.047 Klimentyeva, S. V., & Ilina, A. M. (2021). Progress in the implementation of the digital economy and its prospects in the Samara Region. Vestnik of Samara University. Economics and Management, 12(2), 111–122. https://doi.org/10.18287/2542-0461-2021-12-2-111-122 Kovalchuk, S., Gritsenko, S., Yaroshenko, I., Semyhulina, I., & Kobets, D. (2021). Structural changes in economy of the regions in the context of digitalization. Laplage em Revista, 7(3C), 669–681. https://doi.org/10.24115/S2446-6220202173C1676p.669-681 Kozachenko, G. V., Onyshchenko, S. V., & Zavora, T. M. (2019). Methodological principles for assessing socio-economic security of a region. The Problems of Economy, 1(39), 59–66. Kruglov, D. V., & Amelchenko, E. N. (2020). Development of entrepreneurial structures in a digital economy: A regional aspect. Economics and Management: Scientific and Practical Journal, 2(152), 29–32. https://doi.org/10.34773/EU.2020.2.5 Mancheva-Ali, O. (2021). The digital economy and its impact on consumption in the regions of Bulgaria: Conference. Proceedings of the SDT 2020: 3rd International Conference Spatial Development of Territories (pp. 256–261). Paris: Atlantis Press. https://doi.org/10. 2991/aebmr.k.210710.043. Nowak, D., Dolinskyi, L., & Filipishyna, K. (2021). Digital challenges in the economy and their impact on regional development. Economics Ecology Socium, 5(4), 39–47. https://doi.org/10.31520/26167107/2021.5.4-5 Popov, E. V., Semyachkov, K. A., & Popova, G. I. (2020). Socioeconomic effects of the formation of smart cities. Problems of Territory’s Development, 2(106), 34–45. https://doi.org/10.15838/ ptd.2020.2.106.3 Shvaiba, D. N. (2020). Trend models for analysis of socio-economic security. Science & Technique, 19(2), 108–112. https://doi.org/10. 21122/2227-1031-2020-19-2-108-112 Surnina, N. M., & Shishkina, E. A. (2020). Digitalization as a factor in ensuring sustainable development of spatial infrastructural systems in the region. Scientific Works of the Free Economic Society of Russia, 223(3), 251–259. https://doi.org/10.38197/2072-20602020-223-3-251-259 Vlasov, M. V. (2020). Digital economy as the main direction of increasing the region’s economic security level (A case study of the Central Federal District subjects). Perm University Herald. Economy, 15(2), 271–287. https://doi.org/10.17072/1994-9960-2020-2-271-287 Yakovenko, N. V., & Ten, R. V. (2021). Socio-economic security of the Voronezh region. South of Russia: Ecology, Development, 16(4), 127–135. https://doi.org/10.18470/1992-1098-2021-4-127-135

Strategic Management of Innovation-Oriented Activities of Business Structures, Taking into Account Noospheric and Sustainable Development Approaches Transformed on an Advanced Methodological Basis Galina N. May-Boroda , Alexander P. Gorbunov , Natalya N. Gorbunova , and Miroslava A. Gorbunova Abstract

Keywords

The purpose of this study is both the analysis of strategic management of innovation-oriented activities of business structures from the point of view of its resource provision, and the design of components of its improvement in the context of the noospheric approach and the approach of sustainable development transformed on a new methodological basis. The authors proceed from the fact that the innovationoriented activity of business structures that are under state strategic management and aimed at the transition to the newest, transformative and creative type of thinking and action, contribute to the newest innovative mode, which can become a prerequisite for the formation of the innovation economy and the corresponding type of society. This paves a real path to the true noosphere, since real universal reasonableness, intelligence, consciousness can emerge only in the processes and relationships of positive inclusive productive and transformative activity and communication. This also leads to the achievement of true sustainable development, since the continuous production and implementation of useful innovations that are in demand in society guarantees real stability and balance of the progressive dynamics of development. Based on this main perspective and taking into account the challenges of Russia’s sustainability in the conditions of sanctions, the main directions for improving the strategic management of innovative activity of business structures and strengthening its resource provision are identified, and appropriate methodological recommendations are provided.

Strategic management of innovation activities · Innovation-oriented business structures · Noospheric approach · Concept of sustainable development · Transformational-overcointegrative methodology

G. N. May-Boroda (✉) · A. P. Gorbunov · N. N. Gorbunova · M. A. Gorbunova Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]

JEL Codes

В41 · В59 · F63

1

Introduction

An integral characteristic of the development of the current economy is the formation of an innovative mode. In these conditions, the urgent problem is the need to improve the strategic management of innovative activities of business structures. This is primarily due to the need for maintaining a constant balance and positive dynamics of qualitative changes in socio-economic systems, which is quite consistent with the goals of real sustainable development. Ultimately, this also corresponds to the noospheric approach, since the formation of an innovative economy forms the necessary basis for the transition to a transformative and creative type of society in which all its members are called upon to act on the basis of true reasonableness and general consciousness. At the same time, it is urgently necessary to create such a mechanism for strategic management of innovation-oriented activities that would facilitate the consolidation of the aspirations of various participants: the state, business structures, educational and scientific organizations, venture companies, as well as development institutions based on the principles of public partnership. Special attention is required by such a specific mechanism of strategic management of innovative activity of

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_12

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entrepreneurial structures as the functioning of a complex structure of institutional elements capable of providing funds for reproduction, accumulation, distribution, as well as for a comprehensive assessment of the effectiveness and efficiency of using the necessary resources to ensure a highquality level of strategic management of innovation activities and the transformation of entrepreneurial structures into an innovation-oriented type. All this presupposes the formation of the newest type of strategic management—transformation-oriented, which is based on foresight and the corresponding necessary improvement of the resource provision of innovative activity of business structures with the development and implementation of anticipatory management decisions. This creates opportunities not only for strengthening the foundations of an innovative economy, which is built on a fundamentally new paradigm of universal regulation of various types of resource provision for strategic management of innovation-oriented activities, but also for the formation of such a new type of society, in which transformative and creative and therefore truly reasonable and conscious intelligence already dominates.

2

Methodology

The methodological basis of the research is the latest, advanced transformational-overcointegrating methodology, which allows to link together (overcocombine, overcogeneralize, overcointegrate) on a universal basis and thereby transform various existing approaches, including formational (historical-dialectical), global-evolutionary, civilizational, systemic (system-universal), situational, noospheric ones, as well as sustainable development approach. This advanced methodology considers all socio-historical and, above all, socio-economic processes and relations in their generally-general connectedness and coconsistency. That is why it makes it possible to see the foundations of conceptual types of management in the logical-historical types of socio-economic systems. With regard to such approaches as the noospheric and the sustainable development approach, it should be noted that they eliminate their inherent disadvantages and limitations and strengthen their cognitive and projective potential when transformed on this latest overcointegrating methodological basis.

3

Results

The results have not only research and analytical characteristics, but also projective and proactive activity properties, which is due to the advanced nature of the methodology used.

It is urgently necessary to foresee the main vector of socioeconomic, as well as socio-structural and socio-cultural development of society, and in addition, the nature of the systemic transformations required in this connection in order to direct activities in the right direction. And this not only has a global-planetary dimension, but is also relevant in relation to the situation in the Russian Federation. Despite the increased attention to the conditions of entrepreneurial activity in Russia at the present time, a number of unresolved problems can be found. The main one, which is becoming the key one, is the misunderstanding of the essence of the main vector of socio-economic development and the resulting delay in creating conditions for innovation-oriented business structures, as well as, in general, in the organization of strategic management. The solution of this essential theoretical and methodological problem will pave the way for a full-fledged innovative development. For Russia, the relevance of this is currently increasing due to the fact that it has to act under the growing pressure of sanctions. We need to focus on the formation of a new complex of both socio-economic and organizational-economic relations, which would correspond to the conditions of the development of the innovative economy, and also contribute to reducing losses from economic sanctions applied against the country. It should be particularly noted here that in the current type of economy, business structures operate in conditions of this type of competition, which leads to monopolization. It is obvious that entrepreneurship creates prerequisites for a competitive process that contributes to increasing innovation potential and enhancing its competitive advantages. Based on this, a whole range of urgent tasks is already being implemented, contributing to the growth of the level of innovation of business structures: – development of innovative technologies and products and their implementation not only in the production process, but also in the management system of individual organizations; – active involvement in the processes of informatization (digitalization); – creating conditions for the qualitative improvement of human capital, including through professional development and retraining programs, mastering not only narrow, specialized professional competencies, but also supraprofessional, including transformational (creative and innovative) ones; – active participation of business structures in various public-private partnership projects; – formation of new types of partnership models, through integration processes, including on a network basis.

Strategic Management of Innovation-Oriented Activities of Business Structures. . .

However, all this is not sufficient anymore—and not only for a successful business in the conditions of sanctions restrictions, but also taking into account the main socioeconomic perspective. And in this regard, the noospheric and sustainable development approaches transformed on an advanced methodological basis, which has already been described above, contribute to a better understanding of many things. They make it possible to understand which factors, integral in their nature, now are already of key, decisive importance, and even more so in the future. The first of such factors, which it is necessary to single out, namely, the innovation-oriented transformation of the entire activity of entrepreneurial organizations. All organizations should be transformed according to the innovation-oriented model—and not only their production, but also their management. Accordingly, the next most important integral factor is reorganization of the management system of business structures. The fact of the matter is that strategic management, including strategic planning at the level of organizations, should no longer be carried out on the old methodological basis, but on a new one—on the principles of transformational (creative and innovative) management. That is, in fact, the newest, most advanced style of thinking and action is needed. This newest transformation-oriented style fully corresponds to the tasks of the formation of a true noosphere—in which the reasonableness of reasonableness, the intellectuality of intelligence, the consciousness of consciousness dominates—because in this type of thinking and action, the determining factor is the focus not on private interests aimed only at one’s own benefit and nothing more, but on the couniting, cointegrating, cosocializing, generallygeneral interest. And in fact, only this type of managerial, (comanagerial) thinking is capable of generating appropriate collective actions aimed at implementing the goals and objectives of true sustainable development, taking into account their systemic and complex nature. This leads to an understanding of another important integral factor: after all, the type of governance at the state level should change accordingly. It should also become transformation-oriented and thereby strengthen its strategic nature. This includes, of course, innovation-oriented structural transformations in the economy, implemented under the guidance of the state, as well as support for science and strengthening the macroeconomic integrity of the innovation process, the formation of an innovation-based management mechanism. Strategic management and planning at the state level, which has such a focus, is the main tool for the development

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of an innovative business environment. It, in its quality, just provides a direction to innovation priorities, as well as the concentration of the resource potential of entrepreneurial structures in the context of a universal system innovationoriented approach. Competition (competitiveness) at the same time changes its content and acts as a link of innovation activity, as well as an independent element of the system of resource provision and regulation of innovation activity of all socio-economic systems. Thus, strategic management of the development of innovative mechanisms at the state level acts as a necessary pattern that requires its implementation in the activities of state bodies. The relevant type of state strategic management cannot be purely formalistic, only superficially economic and superficially supportive, but should be based on the deepest economic innovation-oriented foundations. The main directions of resource provision of business structures from the point of view of strategic management of their innovation activities at different levels of the economic system are: – achieving continuity in obtaining additional effect from the use of innovative resources; – creation of a network of business structures with scientific organizations and universities; – giving priority over professional, primarily transformative competencies and providing conditions for their mastering by employees. The problems that have an impact on the resource provision for improving the strategic management of innovation activities are related both to the current level of development of business structures and to insufficient financing of the domestic science and technology (Goldstein, 2014). Back in the early twentieth century, it was proved that the peculiarities of the creation and functioning of entrepreneurial structures are due to the general scientific-technological, as well as socio-economic level of development of society. In this regard, it should be noted that the Russian scientists V.I. Vernadsky and then A.I. Anchishkin were among the first after K. Marx and F. Engels, who drew attention to the primacy of knowledge in the development of society, its subsystems, which means that it is aggregate knowledge that forms the noosphere as a sphere of mind. That is, transformative knowledge does not only guarantee economic development, but also opens the way to the true noosphere as a sphere of intelligent intelligence. These are interrelated things (Bogomolova, 2015). In this regard, it is worth noting the fact that those entrepreneurs (as economic entities and as members of society) who consciously and responsibly reorient the activities of their structures on an innovation-oriented basis, thereby

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become part of the newest social transformationalcreational over(trans)coclass. Sufficient mobilization of resources for strategic management of innovative activities of business structures largely determines the continuity of generation of promising ideas that can be implemented in innovation. There is a direct correlation in this issue. It should be emphasized that serious changes are needed not only in the system of production and application of the latest knowledge, but also in the financial support of this system itself in the Russian Federation (Degtyarev et al., 2013). In Russia, most business structures often show little interest in innovations in general and even less in domestic developments, which may explain the fact that many scientific solutions are not in demand by them. Another problem is investing in the cutting-edge technologies and solutions. Thus, foreign business organizations invest about 10–15% of their own turnover in fundamental research and R&D. In Russia, private structures invest significantly less in innovations, in general, three times less than the state (Khakimov, 2019). We cannot be satisfied with the fact that the Russian Federation is in the top ten countries in terms of absolute spending on science—due to the fact that Russia is only in the top 30 countries in terms of the share of these expenditures in GDP (Alexandrova & Shilova, 2019). Strengthening investment support measures for the production system and the application of the latest knowledge is an essential component of the strategic management of innovation activities of business structures. It is this factor that is extremely important, because it makes it possible to be one of the leading countries in international development. It is advisable to redirect both budgetary and extra-budgetary funds to support fundamental and applied science. In turn, science should give appropriate results that will ensure high profitability. It is also necessary to eliminate all barriers to innovation. According to a number of economists, Russia needs such new venture funds that will be able to bring advanced technologies to the strategically important innovation market, including in the form of start-up projects in retail, as well as in the field of IT and e-commerce. Consequently, the impetus to increase resource support for the strategic management of innovative activity of business structures can come from the tasks of digitalization. The most important resource is the training of a new type of personnel with the latest level of both professional and, first of all, supra-professional qualifications, which is based on a new, transformationoriented content of education. A methodological and practical approach to the institutions of education and science as key drivers of

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development can radically change the situation based on the following: – advanced knowledge is among the most valuable resources capable of supporting and developing innovation-oriented activities of entrepreneurial structures; – educational institutions perform the function of training advanced innovation-oriented personnel, while forming the main professional and transformative supraprofessional competencies, thereby improving the intellectual capital of society; – educational organizations can quickly change training profiles based on public demand for new directions. Therefore, the triad “state—business structures—education” should be strengthened on the newest basis. According to the Ministry of Labor and Social Protection of the Russian Federation, the share of highly qualified workers in Russia is about 5% of the economically active population, which is much less than in developed foreign countries, for example, in Germany, where this indicator reaches almost 56% or in the USA, where it is about 43% (Dedov, 2019). In our country, programs are already being implemented to form high-tech industries, as well as engineering centers together with universities and business structures. This includes the priority project of the RF Ministry of Science and Higher Education “Universities as centers for innovation creation”. Positive examples are seen in cities such as Voronezh, Krasnodar, as well as Tula, Novosibirsk, and Vladivostok, etc. Another such project “Modern digital Educational environment”, aimed at developing a high-quality and accessible online learning environment. To confirm the importance of these measures, we can cite the statement of V.I. Belyaev that in the current conditions our country requires non-standard, non-trivial management decisions, which primarily relate to the sphere of science and education. The formation of a sustainable and balanced mechanism for resource support of strategic management of innovative activity of business structures is the basis of permanent progressive development of Russia’s economy. Considering innovative resources as the core of modern economic processes allows, in our opinion, to carry out the necessary evaluation measures to fix qualitative changes in the strategic management of innovative activities of business structures in a more reasoned manner. We need not only a comprehensive assessment of the results of the innovation strategy, but also operational adjustments for the development of resource provision aimed at improving management methods. Both theoretical and methodological developments and practice-oriented recommendations on the assessment and

Strategic Management of Innovation-Oriented Activities of Business Structures. . .

improvement of the resource support of strategic management of innovative activity of business structures, including in terms of mastering the latest transformation-oriented thinking, the transition to the model of innovation orientation, improving the production system and the implementation of the latest knowledge and technologies, should be directed to the above tasks. Here, the following tasks become relevant for accounting in strategic innovation-oriented management: – implementation of new theoretical and methodological research on the meaning and essence of innovation, as well as on improving the system of science and technology as a key resource for strategic innovation management; – increasing the level of responsibility in government agencies and business structures for the growth and preservation of advanced innovative resources for present and future generations; – revision of the content of all factors (conditions, means) of production in order to ensure their compliance with the innovative mode; – adjustment of mechanisms to stimulate the growth of domestic results in the development and use of the latest knowledge and technologies; – improvement of the legal regulation of innovations. – improvement of the legal regulation of innovation resources.

4

Conclusion

The conducted research makes it possible not only to generalize the results obtained in its course, but also to formulate the main priorities in improving the strategic management of innovation-oriented activities of business structures. Moreover, these priorities are identified in the context of the application of the potential of the noospheric approach and the approach of sustainable development, transformed and thereby strengthened with the help of the advanced transformational-overcointegrating methodology. It was revealed that the radical improvement of strategic management of innovation-oriented activities of entrepreneurial structures is a fundamental pattern that corresponds to the main vector of socio-economic, socio-structural and socio-cultural development of society, leading to the formation of a true noosphere (reasonable reasonableness, intellectual intelligence, conscious consciousness) and true sustainable development. In the sphere of strategic management of innovative activity of business structures, it is necessary to operate and improve the mechanism of resource provision, which includes a set of components, including:

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– formation of the newest type of thinking and action— transformation-oriented, both in public governance and at the level of management of business structures; – stimulating the transfer of business structures to the latest, innovation-oriented model of production and management; – improving the system of production and application of the advanced knowledge and technologies with their implementation in innovations, as well as strengthening the investment of this system. This issue is very relevant for the Russian Federation, its business system in order to ensure not only its survival, but also to achieve leadership positions in the conditions of the ongoing and intensifying sanctions war against it. Also, in the near future, measures aimed at creating a methodology and methods for assessing the effectiveness of strategic management of innovative activities of business structures and its improvement should become a priority in the Russian Federation. The analysis showed that, firstly, the formation of a true noosphere is impossible without a transition to a transformative and creative (that is, a truly intelligent, truly intelligent, truly conscious) type of thinking and action based on the latest innovation-oriented model of production and management. Secondly, truly sustainable development is unthinkable without it, since stability, continuity and balance of development are determined by generally useful transformative and creative activities, for which the generallygeneral public interest is prioritized (not divided by private spheres) is a priority, and, accordingly, by transformativeoriented communication. The resulting set of conclusions makes it possible to formulate the following methodological recommendations in order to optimize the system of resource support for strategic management of innovative activity of business structures: – the need to take into account the growth prospects of hightech markets that can be used to implement the strategic priorities of the Russian Federation; – creation of a more efficient production system and practical implementation of innovations; – more extensive application of the results of fundamental and applied science; – proactive measures to prevent and remove barriers to innovation; – designing both new types of organizational management systems and the necessary new legal norms, advanced forms of management, fundamentally new management methods corresponding to the above trends.

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All this makes it possible to essentially update the mechanism of resource provision of strategic innovation management of business structures, to achieve the objectives of the innovation development strategy, ensuring the maintenance of its balanced integrated dynamics and the transition to a new, transformational-oriented concept of state regulation of resource provision of strategic innovation management.

References Alexandrova, T. V., & Shilova, E. V. (2019). Innovative management: Training manual. Part 2. Perm State National Research University. Bogomolova, A. V. (2015). Innovation Management: A textbook (2nd ed., add ed.). El Content.

G. N. May-Boroda et al. Dedov, S. V. (2019). Resource support for effective innovation management: Theory, methodology, strategy. Doctoral dissertation. Kursk. Degtyarev, V. A., Getmanova, E. S., Vartanova, E. R., Medyanik, N. V., Dneprov, M. Y., Kolyadin, A. P., Lobunko, S. I., Shatalov, S. N., Kasaeva, T. V., Tatarkulova, R. A., Airapetova, A. A., Shevchenko, I. V., Evteeva, E. V., Taranets, A. V., Demina, N. V., Efimov, A. V., Moiseenko, I. A., Nikolaev, V. A., Peresada, A. A., Osmanova, V. P., Temirov, S. E., Temirov, Z. U., Zolkin, E. Y., Davydov, Y. S., Davydov, A. Y., Kilinkarova, S. G., & Mikhailyuk, O. V. (2013). Actual problems of the modern economy. In Collective monograph. Russian Academy of Education. Goldstein, G. Y. (2014). Strategic innovation management: Training manual. Publishing house of Taganrog State Radio Technical University. Khakimov, A. H. (2019). Problems of managing the competitiveness of Russian business structures and ways to solve them: Monograph. Publishing House of Saint Petersburg State University of Economics.

The Methodology of “Smart City” in the Experience of Theoretical Organization of Knowledge of Contemporary Urban Epistemology Oleg A. Vereshchagin

, Vera A. Kolosova

Abstract

The paper focuses on the topical problem of urban studies—the problem of the theoretical organization of knowledge in the context of the formation of such a promising area of urban studies as the epistemology of the city. The authors propose an interpretation of the essence of this intellectual movement within the framework of urban epistemology and urbanism, which is attributively and essentially determined within the framework of a priori construction or “smart city” methodology. This research matrix is relevant and correlative to the general aspirations within the sociological community to create a “smart theory” of the social as a working hypothesis in the analysis of the prospects for future social development. The paper consistently defends the thesis of the socioontological status of the city as the epicenter and focus of all significant innovative and cultural changes and its epistemological status as a reflexive object capable of generating its own self-presentations and selfdescriptions. The “spatial methodology” used in the research corresponds to the basic intentions and principles implemented in the intellectual movement of the “turn to the material” as an influential direction in the development of the post-metaphysical tradition of social research. According to the authors, the need to fix the connection between social dynamics and the transformation of ideas about the essence and nature of the spatial organization of society has the necessary heuristic potential in terms of developing promising and effective recommendations on the main directions of development of urban communities. Keywords

Urban epistemology · “Spatial turn” · Relationalism · Smart city · Urban studies · Sustainable development O. A. Vereshchagin (✉) · V. A. Kolosova · N. E. Belova Arzamas Branch of the Lobachevsky State University of Nizhny Novgorod, Arzamas, Russia

1

, and Natalya E. Belova

Introduction

Theoretical and methodological problems of “urban studies” require correct conceptualization and interpretation in terms of streamlining the conceptual apparatus, analyzing available discursive means, and generalizing the experience of organizing theoretical knowledge in promising areas of urban ontology and theory of knowledge. In this regard, it is important to assess the epistemological status of the “smart city” methodology as an a priori speculative construction that sets the parameters for the perception of the most significant processes of urban life. An equally significant research task is to determine the degree of conjugation and relevance of adjacent categories of social “smarttheory,” such as smart management, smart marketing, smart economy, and smart city, in terms of their theoretical and methodological connection within the framework of the general intellectual movement “smartness” in the social sciences.

1.1

Methodology

The research explicates the key idea regarding the correlativity of the “smart city” conceptual model with the existing theoretical reconstructions of the “sustainable urban form” in contemporary urbanism and city epistemology. The “spatial methodology” used in the research corresponds to those basic intentions and principles that are implemented in the intellectual movement of the “turn to the material” as an influential direction in the development of the postmetaphysical tradition of social research. The need to fix the relationship of social dynamics with the transformation of ideas about the essence and nature of the spatial organization of society has the necessary heuristic potential in terms of developing promising and effective recommendations on the main directions of development of urban communities. On the hand, the theoretical base of the research is retrospectively focused on the study of the works of the classics of

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_13

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urban epistemology, sociology of space, and critical urban studies, such as Soja (1996, 2003), Lefebvre (1968, 1991, 2015), Harvey (2011), Latour (2014) and others. On the other hand, the theoretical base is conceptually organized in the space of topical ideas expressed by contemporary Russian and foreign authors within the framework of the current urban studies agenda, including Filippov (2003), Trubina (2011), Vakhshtein (Wachstein, 2006, 2015, 2022), and Allen et al. (2015).

2

Results

Contemporary urbanism and urban epistemology are actively reshaped in accordance with the changes that the social and philosophical optics of city perception undergoes in the current mental context of the “intellectualization” of all forms of social life. Some working definitions can be proposed, for example, “cognitive shift” or “cognomic movement” (Karpenko, 2009) in social theory, including in the conceptual constructions of “urban studies,” when attempts are made to outline the contours of the “cognitive theory” of the social (Mikhailov, 2018) and all its constituent features and attributes. “Intellectualization” has become the most common place in socio-humanitarian research, denoting the specific reflexive efforts of researchers to establish a correspondence between refined means of analysis and the ideological and content context that frames the theory of “smart society” (Ardashkin, 2017). The conceptualization and categorization of the “smart theory” of the social expand the field of research, including all new objects, including smart management, smart marketing, and smart economy (Maksimova, 2011) in general, and the smart city as one of the key dimensions in its practical implementation and incarnation. The “intellectualization” of the “non-human,” the objective and the material-objective dimension of urban life, is a recent but conceptually well-established reflexive device. We are talking about the rearticulation of the entire conceptual vocabulary of social science or a radical “reassembly of the social” (Latour, 2014) in sociological science. When B. Latour proposes to “desociologize” social theory and redefine the social by “tracing connections” “between things that are not social in themselves” (Latour, 2014, p. 17), he primarily speaks about a certain change of course within the framework of the so-called “turn to the material” (Wachstein, 2015) in the strategies of social analysis. Rehabilitation of things, “emancipation of objects of the material world, their release from the pressure of traditional primary realities of sociological axiomatics” (Wachstein, 2015, p. 11) allows material objects to become full participants in the social world. Now material objects are assigned “a specific role assigned to non-humans . . . they must be actors and not just miserable carriers of a symbolic

projection” (Latour, 2014, p. 23). This alternative methodology (“networks of actors and assembly theory” (Allen et al., 2015)) in the practice of urban studies marks a shift in urban epistemology in terms of “building rhizomatic networks of urban connections, both human and non-human” (Allen et al., 2015, p. 7). That is, it forms a fundamentally “nonsociological” and non-symbolic optics of social science analysis and re-actualizes the type of sociological thinking outside the traditional dichotomies of social/natural and spiritual/material. In the proposed perspective, certain phenomena of “urban associations” can only be understood as the effect of the interaction of complex networks and sociotechnical and anthropotechnical networks, including heterogeneous agents of human and non-human nature. In this connection, the model of a “smart citizen in a smart city” (Vorobeva et al., 2019) is, first of all, a multidimensional model, heterotopic and heterogeneous in terms of the nature of the connections and relationships that form and hold it together. The instrumentalist pathos of contemporary theorizing in urban ontology and epistemology, where cities are visualized as “constellations of tools on many scales. . . and connected through many networks,” providing continuous data on the movements of people and materials in terms of “a stream of decisions about the physical and social form of the city” (Batty et al., 2012, p. 482), is largely ahumanistic or post humanistic. This is a kind of embodied urban technohumanism, in which residents are deeply integrated with the intellectual technical environment and, in fact, turn out to be “a means to achieve the supposed smartness, like other non-human actors of this system” (Vorobeva et al., 2019, p. 60). The question of the permissible limits of such integration and involvement of the human and non-human lies entirely in the plane of urban ecology research and is indeed very debatable from a methodological and ideological point of view. Additionally, the simultaneous attribution and correlation of a smart city with the widely presented theoretical reconstructions of various “sustainable urban form” models (“stable city,” “eco-city”) (Jenks & Dempsey, 2005), which pre-establish a smooth evolutionary development of future architectural forms and design solutions in practices of sustainable urban development. That is, we are still talking about probabilistic scenarios and predictive estimates of urban development, while the ideologeme of a smart city itself as a real “embodiment of the eco-innovation paradigm of sustainable development” (Karpova, 2020) is not sufficiently problematized and substantiated in the experience of practical solutions. The significance of these urban models, actively exploiting the patterns of “sustainable development,” as we see it, lies more in the available experience of conceptualizing and categorizing the problems of social development and the realization of the fact that we will

The Methodology of “Smart City” in the Experience of Theoretical. . .

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solve “the main puzzles social evolution through the prism of cities” in any of the possible scenarios (Batty et al., 2012, p. 515). The requirement of a “new geography” of imagination and “epistemology” (Roy, 2009) is a call for an active search for relevant forms and conceptual images as a complex epistemological task of urban studies. The “image of the city” is not just a representation among other social representations, not only and not so much a routine plot from the field of historical urban studies and urban epistemology. In our opinion, the “image of the city” plays a special role in social epistemology precisely in the specific practices of visualizing theoretical knowledge in the general system of descriptions of social life. The city personified a unique temporality and embodied a special mode of spatiality; it was “another space” (Foucault, 1998) in which and through which the main event drama of human history and culture unfolded. The most significant part of modern political and economic history is the history of the configuration and reconfiguration of urban space; therefore, in the words of M. Foucault, “the anxiety of our era is mainly connected with space, no doubt, much more than with time” (Foucault, 1998, p. 238). The tradition of “writing about the city in terms of space” (Soja, 2003) has never been interrupted. The basic intuitions and imperatives of the spatial connection of thought, consciousness, and cognition accompany and frame the diverse versions of spatially oriented social theory throughout its history. However, it is precisely “in the ideological connection “postmodernism-spatial turn” (Blyakher et al., 2021, p. 48), in the situation of transition “from the metropolis to the post-metropolis” (Vershinina, 2019), the topological way of representing and perceiving urban life received additional methodological justification. The spatial methodology of urbanism is most consistently reflected in the works of Soya (2008), who proposed the author’s version of synoikism as the epistemological quintessence of a topological perspective in the study of the genesis of social and other cultural innovations in an agglomerative urban environment. Soya’s basic intuition is outlined by the formula for presenting synoykism as an effect of the heterogenization of social life, a consequence of the densification of social interaction practices, unconsciously formatted by the existing topological characteristics and spatial organization of urban communities. According to Soya, all the most significant attributes of cultural and civilizational development (including the creative activity of the masses, the innovative potential of elites, the territorial identity of the population, and the political consciousness of citizens and their social organization) are stimulated by the facts of living together in urban agglomerations, which allows defining synoikism in terms of “spatial originality of urbanism—real and imaginary,

material and symbolic geography or spatial dimensions of urban life” (Soya, 2008, p. 132). The urban epistemology of Soya reveals socialized versions of space and a special spatial way of social reconstruction of economic, material, and cultural phenomena. In this regard, a peculiar other problematic of the spatial organization of social life is reactivated; what Lefebvre (2015) defined as the social “production of space,” meaning by this the implementation of the “concept of space as a social product” (Lefebvre, 2015, p. 9). According to Lefebvre, the urban space “is productive, productive in its own way, it (whether well or badly organized) is included in production relations and productive forces . . . it acquires a dialectical character: it is a productproducer, the support of economic and social relations” (Lefebvre, 2015, p. 10). “The right to the city” (Lefebvre, 1968), according to Lefebvre, can be obtained through a change and consistent revision of the conceptual apparatus of urban epistemology. Significant restructuring of socio-economic and powerpolitical relations in the traditional frames of urban interactions turns out to be problematic, if not impossible. Therefore, contemporary urban studies are called upon to redefine and recreate the conceptual framework of the theory of the city through the reactivation of deep analytics and the entire set of critical reflective procedures and practices of urban life. In any reflexive act, a situation of mutual conversion and mutual enrichment of intellectual practices of conceptualization and reconceptualization necessarily arises, bound within the framework of a certain orientational scheme. According to the analysis, the linguo-epistemic status of the orientational scheme is a sufficiently problematized, difficultly explicated, and reduced phenomenon, in the rank of categorical and theoretical a priori setting the parameters of conceptualization as structuring and subsequent “restructuring of knowledge” (Bogdanova, 2006, p. 69). In scientific reconstructions of urban social space, such an orientation scheme or “mental map” (Mitin, 2018) (“cognitive map” (Tolman, 1948)) is represented by various metaforms and social metaphors such as “container,” “network,” “text,” and “scene,” as well as by correlative metalinguistic means. Presented within the framework of the “right to the city” movement, the orientation scheme of the city as a predominantly relational formation, “a network of interactions and communications,” on the one hand, is recognized as debatable, “a component of a rather complex polemic of specialists due to complex collisions between different schools in geography and different schools in social theory and humanities” (Trubina, 2011, p. 36). On the other hand, it reflects the general mindset within the framework of an influential interdisciplinary trend in the “post-modernization of spatial epistemology” (Allen, 1999) and, as a result, is associated with

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the rejection of the principles and attitudes of “container” thinking. One of the main markers of contemporary social epistemology and, in general, the correlative specified methodology of the “thirdspace” idea (Soja, 1996), is the consistent rejection of the bicameral perception of social space, either in the modality of material things or objects or in the projections of mental structures and mental images. It is no coincidence that in his theoretical constructions, Lefebvre offers a specific trialetics of spatial thinking, arguing about the special “multivalence of social space” since “its reality is both formal and material” (Lefebvre, 1991, p. 85). In the interpretation of Harvey (2011), the “third space” is a special relational way of understanding space that has appeared in social epistemology as an alternative to the absolutist and relative ways of spatial reflection. The re-actualization of the Leibnizist spatial methodology by Harvey and Lefebvre consolidates those changes in the onto-epistemological status of social objects that mark a “turn to space” in social theory and are a theoretical expression of the current urban maxim “the city as the physical embodiment of social space” (Burtonova, 2018). According to Harvey, “processes do not occur within space, but set their own internal spatial frame.” Therefore, “an event or thing at a certain point in space cannot be understood by appealing to something that exists only at this point in space” (Harvey, 2011, p. 14). There are no isolated spaces, no isolated objects (material and mental) that form these spaces. All events and objects localized in a certain spatial configuration depend on everything that happens around this space; that is, they are framed and determined by “a wide range of various influences that envelop space in the past, present, and future, concentrate and freeze at a certain point . . . in order to determine the nature of this point” (Harvey, 2011, p. 14). The so-called relational way of understanding urban spaces is not exclusive but only complementary to other research strategies to the extent that theoretical multiperspectivism and multipositionality are possible in the entire set of interdisciplinary studies of urban studies. The rethinking of the city and technology, including as a system of things, and the relevant re-description of the status of a thing as a unity and simultaneity of the intersubjective and interobjective, allows contemporary authors to conclude that the urban landscape, the elements of urban infrastructure, and the subject-material environment typified and integrated into things show the world images or “models of interaction embodied in natural material” (Pirogov, 2014, p. 53). In this sense, the urban space and the technical and technological components associated with it are the meeting space of the physical and the mental, the point of great unification of res cogitans and res extensa, “the interference of the material and ideal structures of practice” (Pirogov, 2014, p. 54), “the real embodiment of socio-cultural projects” (Pirogov, 2014,

O. A. Vereshchagin et al.

p. 56), by what is socially determined and culturally conditioned, but, one way or another, is connected with spatial-object realization and objective existence. The methodological maxim of urban epistemology, built on the principles of “spatial turn,” is the idea of interdependence and correlativity of the processes of social change and relevant subject transformations. Therefore, the formula for recreating a material object as an “anchor (anchor) of social interaction” (Wachstein, 2006, p. 14) reflects the corresponding intellectual practice of formatting social life, which turns out to be “inconceivable without the participation of material objects” (Wachstein, 2006, p. 13). The city is not only and not so much a material object or a series of such objects; the city, which is fundamentally important for social cognition and self-knowledge, is, first of all, a reflexive object, that is, an object “continuously producing self-descriptions” (Wachstein, 2022, p. 549). The same descriptions that we reproduce in our intellectual experience, in the words of K. Knorr-Cetin, are representations or substitutes; their role and significance are to “compensate for the fundamental insufficiency of the object” (Knorr-Zettina, 2006, p. 285). “The open and revealing nature of the objects of knowledge does not allow the representation to come true, therefore, any representations of the “image of the city” cannot “grab” the thing they point to . . . they rather reproduce the absence than makeup for it” (Knorr-Zettina, 2006, p. 286). In this sense, the representations and models of description with which we operate can say much more about ourselves, about our cognitive strategies and practices, than about the objects of representation themselves. It is paradoxical but quite correct to conclude that “objects of knowledge structure desire or ensure the development of the desired structure” (Knorr-Zettina, 2006, p. 286). In other words, knowledge of the city is one of the ways of social self-knowledge. Therefore, the representation of the “image of the city” in any of the proposed orientation schemes opens up the possibility of a critical analysis of the entire set of cognitive, epistemological, and reflective resources used in various research strategies for describing the city. For example, the explication of social, including urban, spaces through the metaphor of a “container” is a familiar way of sealed national-state thinking. In the contemporary world, in which borders have lost their former stability and self-evidence, the very possibility of “sustainable territoriality of social phenomena” is significantly problematized (Filippov, 2003, p. 6). Thus, the emphasis is more on the relational understanding of space. In this case, the starting point of theorizing for the researcher is the position that he or she publicly or tacitly shares in the ongoing long-term discussion regarding the prevailing trends and tendencies in social development. The choice of strategy in favor of the relational way of

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understanding the territoriality of social processes and phenomena, that is, the interpretation of space “as formed by social relations of different scales” (Trubina, 2011, p. 36), in fact, is an episode of the controversy “about the understanding of globalization,” the ritual victims of which are “statecentric approaches” and the “container images” relevant to them in terms of the nation-state. In this regard, it is difficult to imagine (now and in the future) the possibility of the existence of a certain neutral meta-position or meta-strategy of theorizing, which would allow the researcher to eliminate those initial conditions and grounds in which the selection of facts and their conceptualization take place without a clear threat of turning such a practice into a scholastic and abstract non-referential scheme.

European Physical Journal Special Topics, 214, 481–518. https:// doi.org/10.1140/epjst/e2012-01703-3 Blyakher, L. E., Demyanenko, A. N., Kireev, A. A., Klitsenko, M. V., Lamasheva, Y. A., Lebedeva, M. M., et al. (2021). “Spatial turn” and its interpretation in Russian science and institutional practice. Ojkumena. Regional Researches, 2(57), 46–59. https://doi.org/10. 24866/1998-6785/2021-2/46-59 Bogdanova, S. Y. (2006). Conceptualization and reconceptualization of spatial relations (the container schema). Issues of Cognitive Linguistics, 1(6), 69–80. Burtonova, V. N. (2018). City as a physical embodiment of social space. Bulletin of the Buryat State University, 3(3), 18–24. https://doi.org/ 10.18101/1994-0866-2018-3-3-18-24 Filippov, A. F. (2003). Theoretical foundations of the sociology of space (Synopsis of Dissertation of Doctor of Sociological Sciences). Moscow, Russia: MGIMO University. Foucault, M. (1998). Of other spaces. In N. Mirzoeff (Ed.), The visual culture reader (pp. 237–245). Routledge. Harvey, D. (2011). Space as a keyword. TOPOS, 1, 10–38. Jenks, M., & Dempsey, N. (2005). Future forms and design for sustainable cities. Architectural Press. Karpenko, M. P. (2009). Cognomics. SGA. Karpova, N. V. (2020). Smart city as embodiment of eco-innovation paradigm of sustainable urban development. Bulletin of the Rostov State University of Economics, 3(71), 17–23. Knorr-Zettina, K. (2006). Sociality with objects: Social relations in postsocial knowledge societies (N. Edelman Transl. from English). Moscow, Russia: Territory of the Future. Latour, B. (2014). Reassembling the social: An introduction to actornetwork-theory. Higher School of Economics. Lefebvre, H. (1968). Le droit à la ville. Anthopos. Lefebvre, H. (1991). The production of space. Blackwell Publishing. Lefebvre, A. (2015). Production space (Transl. from French). Streike Press. Maksimova, V. F. (2011). Smart (intellectual) economy: Goals, objectives and prospects. Open Education, 3, 63–71. Mikhailov, I. F. (2018). How is cognitive theory of society possible in our time? Electronic Philosophical Journal VOX, 25. Accessed February 28, 2022, from https://vox-journal.org/html/issues/450/475 Mitin, I. I. (2018). Mental maps of the city: The history of the concept and the variety of approaches. Urban Studies and Practice, 2(3), 64–79. Pirogov, S. V. (2014). Images of the city and technology as the system of things. Tomsk State Pedagogical University Bulletin, 7(148), 53–58. Roy, A. (2009). The 21st-century metropolis: New geography of theory. Regional Studies, 43(6), 819–830. https://doi.org/10.1080/ 00343400701809665 Soja, E. (1996). Thirdspace. Blackwell Publishing. Soja, E. (2003). Writing the city spatially. City: Analysis of Urban Trends, Culture, Theory, Policy, Action, 7(3), 269–281. https://doi. org/10.1080/1360481032000157478 Soya, E. W. (2008). How to write about a city in terms of space? Logos, 3(66), 130–140. Tolman, E. C. (1948). Cognitive maps in rats and men. Psychological Review, 55(4), 189–208. https://doi.org/10.1037/h0061626 Trubina, E. G. (2011). Turn to space: Interdisciplinary movement and the difficulties of its popularization. Political Conceptology, 4, 34–49. Accessed February 28, 2022, from https://politconcept. sfedu.ru/2011.4/02.pdf Vershinina, I. A. (2019). New features of social inequality: Edward Soya’s concept of postmodernist urbanization. Bulletin of Moscow University. Series 18: Sociology and Political Science, 25(1), 62–74. https://doi.org/10.24290/1029-3736-2019-25-1-62-77 Vorobeva, O. V., Manzhula, E. A., & Yashina, A. V. (2019). Smart citizen in a smart city: Review of Russian and international

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Conclusion

Preliminary results of the research were achieved in several subject areas from the field of analysis of theoretical problems of urban research: 1. The ideological and methodological connectedness of the concept of “smart city” as one of the theoretical dimensions of the “smart theory of the social” as part of the global trend for the intellectualization of public life was demonstrated; 2. The methodological and heuristic potentials of the relational way of understanding the spatial organization of social processes and phenomena are illustrated; 3. The idea of the city as a reflexive object is explicated, capable of generating its own forms of meta-description and representation; 4. A preliminary conclusion was made about the conjugation of various types of reflection of urban spaces with mental attitudes in assessing the prospects of globalism or localism.

References Allen, R. L. (1999). The socio-spatial making and marking of ‘us’: Towards a critical postmodern spatial theory of difference and community. Social Identities: Journal for the Study of Race, Nation and Culture, 5(3), 249–277. https://doi.org/10.1080/13504639951482 Allen, J., Scott, A. J., & Storper, M. (2015). The nature of cities: The scope and limits of urban theory. International Journal of Urban and Regional Research, 39(1), 1–15. https://doi.org/10.1111/1468-2427. 12134 Ardashkin, I. B. (2017). Smart-society as a stage of development of new technologies for society or as a new of social development (progress): To the problem of the problem. Bulletin of Tomsk State University. Philosophy Sociology Political Science, 38, 32–45. https://doi.org/10.17223/1998863X/38/4 Batty, M., Axhausen, K. W., Giannotti, F., Pozdnoukhov, A., Bazzani, A., Wachowicz, M., et al. (2012). Smart cities of the future.

74 approaches. International Journal of Open Information Technologies, 7(5), 59–65. Wachstein, V. (Ed.). (2006). The sociology of things and the “turn to the material” in social theory. Territory of the Future.

O. A. Vereshchagin et al. Wachstein, V. (2015). “Turn to the material”: Thirty years later. Sociology of Power, 27(1), 8–16. Wachstein, V. (2022). Imagining the city: An introduction to conceptualization theory. New Literary Review.

Assessment of the Risks of Transition from a Global Pandemic Crisis to a Model of Long-Term Economic Growth Anastasia A. Yussuf , Elena A. Okunkova Tleptserukov , and Larisa M. Butova

Abstract

The paper aims to assess the depth of damage to the world economy by the global economic crisis caused by the COVID-19 pandemic. Moreover, the paper aims to substantiate the possibilities of post-crisis recovery of the world economy and ensuring long-term economic growth. The authors conducted a comparative analysis of the dynamics of key macroeconomic indicators during the recession of 2008 and 2020. The authors concluded that the recession caused by the COVID-19 pandemic led to less disastrous consequences for the world economy than the global crisis of 2008. The analysis showed that the main problem in assessing the possibilities of global economic recovery is the problem of increasing heterogeneity in the development of individual countries or their groups (developed countries, including G7 countries, countries with developing economies). According to all analyzed indicators, during the recovery from the pandemic crisis, developing economies have a greater margin of safety than the economies of developed countries. The authors explain this by the fact that developed economies took the brunt of the “pandonomics,” and the financial strength of developing economies during the COVID-19 pandemic was provided by a global program to save them through monetary policy. The paper identifies problem areas in the transition from recession to a model of sustainable A. A. Yussuf (✉) Financial University under the Government of the Russian Federation, Moscow, Russia E. A. Okunkova Plekhanov Russian University of Economics, Moscow, Russia J. V. Ioda Financial University under the Government of the Russian Federation, Lipetsk Branch, Lipetsk, Russia M. A. Tleptserukov Kuban State Technological University, Krasnodar, Russia L. M. Butova Voronezh State Pedagogical University, Voronezh, Russia

, Julia V. Ioda

, Murat A.

economic growth and substantiates recommendations for overcoming them. Keywords

Pandemic · COVID-19 · Economic recovery · Economic policy · Pandemic crisis · Post-pandemic economy · Pandonomics · Long-term economic growth

1

Introduction

The COVID-19 pandemic caused more than 290 million cases of diseases, claimed more than 5.4 million lives (WHO, 2022), led to a sharp decline in business activity and the destruction of global supply chains and established business ties, and launched an inflation spiral and a global pandemic crisis (Karpunina et al., 2021, 2022). According to analysts, the prospects for the world economy to emerge from the global pandemic crisis on the trajectory of sustainable economic growth look more illusory for emerging markets and low-income developing countries than for developed countries. However, the severity of the consequences of the COVID-19 pandemic for the economies of developed and developing countries, as well as emerging market countries, is based not only on the assessment of the current economic situation but also on the assessment of public access to vaccines, the availability of financial resources for political support of income incentive programs and financial support for the most affected sectors of the economy. In advanced economies, almost 60% of the population is fully vaccinated and will receive revaccination in the future; in low-income countries (developing economies and emerging markets), about 96% of the population remains unvaccinated (IMF, 2021d). Another pressing problem for the global economy is the problem of starting a spiral of inflation caused not only by a sharp stimulation of the financial resources of the real sector of the economy and household budgets but also by supply

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_14

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disruptions and a shortage of goods supply. Along with the release of pent-up demand and the recovery in commodity prices, this also supports an inflationary surge in the economy. Inflationary pressure on household incomes and uncontrolled price hikes for vital resources (e.g., rising gas prices) threaten the political stability and the economic well-being of developing and developed countries (IMF, 2021c). An example is chaos and unrest in Kazakhstan, global social unrest, and the shaking of state institutions caused by a sharp increase in gas fuel prices for the population. Apparently, it is necessary to assess the risks of transition from a global pandemic crisis to a model of long-term economic growth in developed and developing countries, as well as the development of effective measures for its implementation.

2

Literature Review

Most scientists and economists note the unprecedented consequences for the world economy from COVID-19 in terms of a sharp and global decline in economic activity, falling incomes of the population and businesses (Baldwin & Weder di Mauro, 2020; Bonadio et al., 2020; Chetty et al., 2020; Guerrieri et al., 2020; Gukasyan et al., 2022; Hepburn et al., 2020; Jackson et al., 2021; Karpunina et al., 2020; Niyazbekova, 2020; Smirnov, 2020; Van Bergeijk, 2021). Such a situation in economics is described by the term “pandonomics,” or the economy of ruin. The development of pandonomics will require a revision of approaches to the analysis of the world economy, the institutional organization of society, and the assessment of long-term consequences for economic growth (Cambridge Econometrics, 2020; Kirillov & Miller, 2021; Wyplosz, 2020). Chudik et al. (2020) note that the consequences of the COVID-19 pandemic are significantly worse in their impact on the global economy than from the previous eight global crises. In this research, the authors test several hypotheses about the unprecedented fall of the world economy and the greater vulnerability of developing economies relative to developed economies in the post-pandemic period. The first hypothesis is the assumption that the most serious risk of post-pandemic development for the world economy is the growth of public debt and external obligations. The author’s assumption is based on the results of the study of Smirnov and Karelina (2021), who note that a high level of debt obligations in developing countries can lead to excessive stress for debtor countries (developing economies) and creditor countries (developed economies). The IMF report “Global Imbalances and the COVID-19 Crisis” shows that the low level of reserves was a key vulnerability factor before the 2007–2008 crisis for developing economies; in 2020–2021, increased obligations on foreign

debt began to fulfill this role (Kaufman & Leigh, 2020). In the post-pandemic period, the prospects for restoring economic growth in developing economies are very contradictory for several reasons, including the following: • These economies have a higher share of the sectors most severely affected by the COVID-19 pandemic (e.g., the tourism sector) compared to developed economies; • Underdevelopment of health systems; • Strong dependence on external financing (including the flow of remittances from abroad); • High public debt with a subsequent tendency to increase external debt. Rodygina and Musikhin (2020) prove that developing economies will suffer more during the post-pandemic period than developed economies due to the strong integration of developing economies into global value chains, which leads to their strong dependence on external foreign financing and on downturns in international trade and exports of commodities and tourism. In this research, the authors substantiate the scientific hypothesis about the greater economic vulnerability of developing economies relative to developed economies during the recession of 2020–2021. For this purpose, the authors analyze economic indicators (from the IMF reviews) for the long-term period.

3

Methodology

The research aims to assess the depth of damage to the world economy by the global economic crisis caused by the COVID-19 pandemic by groups of developed countries and countries with emerging economies, as well as to identify the key risks of transition from the global pandonomics crisis to a model of long-term economic growth. The research objectives are as follows: 1. To assess the depth of the economic crisis based on the analysis of the dynamics of changes in basic economic indicators; 2. To assess the stability of the world economy by studying changes in the volume of investments, gross national savings, the current account balance of payments, and the volume of public debt; 3. To identify problem areas in the transition from recession to a model of sustainable economic growth and formulate recommendations for overcoming them. The authors analyze the following groups of countries: • 40 advanced economies (developed economies);

Assessment of the Risks of Transition from a Global Pandemic Crisis to a Model of. . .

• A subgroup of large advanced economies—G7 countries (USA, Japan, Germany, France, Italy, UK, and Canada); • A group of 156 emerging market and developing countries (emerging economies). The research methods include theoretical analysis, graphical method, economic and statistical analysis, systematization, systematic approach, and the comparative method.

4

Results

We begin our analysis of the economic weakness of developing economies relative to developed economies by comparing the rate of annual change in real GDP (Fig. 1). In the long term, two global downturns in the global economy can be distinguished—the crisis of 2008 and the crisis of 2020. In 2009, real GDP in the world decreased by 0.1%: the GDP of developing economies grew by 2.8%, the GDP of developed economies reduced by 3.3%, and the most significant decline in real GDP occurred in the G7 countries (-3.7%). In 2020, the recession caused by the COVID-19 pandemic led to a 3.1% decrease in real global GDP: a decline in GDP equaled 4.5% in developed economies and 4.9% in the G7 countries. The smallest decline in GDP (2.1%) is typical for developing economies. IMF analysts also predict that, on average, over the period 2021–2026, real GDP in the world will grow by 4.1%: it will increase by 2.7% in the G7 countries, by 2.8% in developed economies, and by 4.9% in developing economies (IMF, 2021d). Thus, the greatest strength of the sharp decline in business activity during the two global recessions of 2008 and 2020 is observed in developing economies. Another pressing problem of the post-pandemic period is related to the growth of inflation during the recession, as well as the subsequent long-term trend of rising inflation Fig. 1 The rate of annual change in real GDP of developed countries, G7 countries, and developing economies, 2001–2026, in %. Source: Compiled by the authors based on IMF (2021d)

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expectations. In terms of macroeconomics, emerging markets and developing countries should be strongly affected by side effects in the form of capital outflows, exchange rate depreciation, and inflation (Abel & Bernanke, 2012). We will analyze the changes in average consumer prices from 2001 to 2021. The growth of inflation during the recession of 2008–2009 became a threat to the stability of the world economy. In 2008, the inflation rate rose to 6.3% in the world; in developed economies and in the G7 countries, it reached 3.4% and 3.2%, respectively. We can note a serious increase in inflation in developing economies to 9.2%. In 2020–2021, the jump in inflation was smoother than during the 2008 crisis. In 2021, the global average annual inflation rate was 4.3%; it reached 2.8% in developed economies and 5.5% in developing economies (IMF, 2021d). The hypothesis of the greater economic vulnerability of developing economies compared to developed economies during the recession of 2020–2021 cannot be assessed without considering the decline in the national welfare of the economies. National well-being depends on the total income of the country and on the amount of accumulated wealth, including gross accumulated savings. The latter is determined by the volume of investments in the economy and the current account balance of еру economies. IMF statistics indicate that the global current account balances of countries increased during the recession of 2020, and the pandemic probably slowed the downward flow of funds from richer countries to poorer countries (IMF, 2021b). This fact highlights the uneven impact of the COVID-19 pandemic and potentially exacerbates the differences in the speed of recovery of different economies. Additionally, subsequent waves of COVID-19 may complicate the downturn in global trade and supply chains, reduce investment demand, and limit the financing of current account deficits for emerging economies.

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Fig. 2 Current account balance, the volume of investments from GDP, gross national savings, and gross public debt in the G7 countries, 2007–2022. Source: Compiled by the authors based on the IMF (2021d)

At the beginning of the COVID-19 pandemic, developing economies faced a sharp and sudden change in the direction of capital flows, as well as the depreciation of national currencies. Subsequently, the soft and large-scale support of the global economy improved the relations of investors and creditor countries to risk, which caused the stabilization of capital flows. New waves of the COVID-19 pandemic will undoubtedly cause a tightening of global financial assistance to businesses and the population, which will weaken the possibility of maneuvering to manage the current account deficit for developing economies, reduce the current account balance of commodity exporters, and, probably, prolong the downward trend in world trade. In the medium term, emerging economies will face the need to stimulate investment and limit excessive private savings. This will require countries with excessive current account surpluses to implement measures aimed at attracting private investment in the context of tightening monetary policy. In particular, stimulating the inflow of private investment into economies suffering from recession is possible by preserving gross national savings and preventing their excessive growth. Countries with developing economies may face the problem of growing insolvency on their debts against the background of rising interest rates and maintaining low growth rates of government revenues. Thus, despite the expected budget deficit reduction in 2021 by about 2% GDP, the global public debt remained at a record high, close to 100% of GDP (IMF, 2021a).

We propose to conduct our assessment of the “shocks” of the impact on the global economy through a more detailed analysis of the annual changes in several indicators linked to the level of GDP: the balance of the current account, the volume of investments from GDP, gross national savings, and total government gross debt for the period from 2007–2022. We will start our analysis with the G7 countries (Fig. 2). During the 2008 crisis, the G7 countries saw a decline in investment and gross national savings. In 2007–2009, investments decreased by 0.3%, 0.7%, and 2.9% of GDP, respectively. There was also a decrease in the volume of gross national savings (by 0.5%, 1.5%, and 2% of GDP, respectively). In 2008–2012, in the G7 countries, there was a trend of a sharp increase in the total gross public debt with maximum growth in 2009 (by 15% of the GDP level) against the background of a persistent current account deficit. During the recession of 2020, the G7 countries saw a decrease in investment by 0.4% and gross national savings by 0.7% of GDP, a sharp increase in gross public debt by 22%, and an acute increase in the current account deficit by 0.6% of GDP. A similar analysis for a group of developed economies is presented in Table 1. In developed economies during the 2008 recession, investment and gross national savings decreased by 3% and 2% of GDP, respectively. Then, in developed economies, a long-term trend was laid for the growth of the gross public debt with a maximum of 13% of the GDP level in 2009. The

Assessment of the Risks of Transition from a Global Pandemic Crisis to a Model of. . .

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Table 1 Current account balance, the volume of investments from GDP, gross national savings, and gross public debt in developed economies, 2007–2022 Year/ Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (forecast)

Investment, a percentage of GDP 23.7 23.0 20.1 20.9 21.4 21.4 21.3 21.6 21.8 21.6 22.1 22.3 22.6 22.3 22.4 23.1

Gross national savings, a percentage of GDP 22.7 21.3 19.4 20.7 21.4 21.9 22.0 22.7 23.0 22.6 23.3 23.4 23.4 23.0 23.6 24.0

Total government gross debt, a percentage of GDP 71.1 77.7 91.0 97.4 101.4 105.5 104.0 103.6 103.1 105.6 103.2 102.7 103.8 122.7 121.6 119.3

Current account balance, a percentage of GDP -0.9 -1.3 -0.2 0.0 -0.1 0.1 0.5 0.5 0.6 0.8 1.0 0.8 0.6 0.3 0.4 0.3

Source: Compiled by the authors based on the IMF (2021d)

2008 recession led to a current account surplus for developed economies. This trend was not affected by the recession of 2020, when the balance decreased by 0.3% of the GDP level. The recession of 2020 caused a decrease in investment and gross national savings by 0.4% of GDP and an increase in gross public debt by 18.9% of GDP. Let us see how the recessions affected the developing economies (Table 2). Developing economies reacted to the recessions of 2008 and 2020 by increasing investment and growing the volume of gross national savings (Restoy, 2020). Moreover, the shock reaction to the preservation of savings in developing economies in 2020 is better than during the recession of 2008: in 2020, the volume of gross national savings increased by 1% of GDP, while savings in 2009 sharply decreased by 1.9%. The gross public debt in developing economies increased by 5.1% in 2009 and by 9% of the GDP in 2020, not due to the rise in external debt. Thus, in 2009, the external public debt decreased by 0.5% of GDP; in 2020, there was an increase in external debt by only 2%. Current account surpluses in emerging economies persisted during the recessions of 2008 and 2020. However, in the post-crisis years, there was a decrease in the current account balance by 2.1% of the GDP level in 2009 and an increase in the current account balance by 0.6% of the GDP level in 2020. During the recession of 2008, there was a tendency to reduce the current account surplus of the balance of payments of developing economies from a pre-crisis peak in 2006 (4.7% of GDP) to a deficit in 2016 (0.3% of GDP).

5

Conclusion

The analysis allows us to draw an unambiguous conclusion that the recession caused by the COVID-19 pandemic led to less disastrous consequences for the world economy than the global crisis of 2008. This is due to the unprecedented program of assistance to businesses and the population from state institutions during the pandemic. The opinion of a number of economists about the ruinousness of pandonomics for the world economy and especially for developing economies is not confirmed by the analysis of economic indicators (GDP, inflation, level of public debt, investments, national gross savings, and the current account balance of payments). According to all analyzed indicators, developing economies have a greater margin of safety relative to developed economies. This situation can be explained by the fact that developed economies, and especially the G7 countries, have taken the brunt of pandonomics. Simultaneously, the financial strength of developing economies during the COVID-19 pandemic is explained by the global program of the rescue of developing economies through the soft monetary policy of the leaders of the world economy. The risk of deepening economic differences between developing and developed economies is very significant; it is caused by the ongoing COVID-19 pandemic, the demand for a transition to a green economy, the deepening gap in access to financial resources, and food security risks. These risks should be mitigated through an adequate policy of preserving

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Table 2 Current account balance, the volume of investments from GDP, gross national savings, and gross public debt in developing economies, 2007–2022 Year/ Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (forecast)

Investment, a percentage of GDP 29.3 30.4 30.6 31.6 32.1 32.3 32.2 32.4 32.2 31.6 32.0 32.9 32.6 33.1 33.2 33.5

Gross national savings, a percentage of GDP 32.5 33.3 31.4 32.6 33.3 33.1 32.4 32.6 31.5 31.1 31.6 32.4 32.3 33.3 33.9 33.9

Total government gross debt, a percentage of GDP 35.5 33.6 38.7 37.5 36.8 36.7 37.8 39.8 43.4 47.8 50.0 51.8 54.0 63.1 63.4 64.8

Current account balance, a percentage of GDP 3.7 3.4 1.2 1.2 1.4 1.2 0.5 0.5 -0.2 -0.3 -0.1 -0.2 0.0 0.6 0.8 0.6

External debt, total, a percentage of GDP 26.5 27.4 26.9 26.1 26.8 26.5 28.5 30.5 30.8 30.2 30.1 30.9 30.6 32.6 31.3 30.4

Source: Compiled by the authors based on IMF (2021d)

international liquidity for countries with limited economic opportunities, as well as measures to maintain the stability and sustainability of developed and developing economies. The author’s recommendations are related to the need to enhance the adaptability of fiscal policy aimed at stimulating the transition of the world economy to environmentally friendly technologies and digital transformation, increasing productivity and resilience to future global crises. It is necessary to increase the volume of public investments in highquality physical capital, education, and healthcare, ensure the implementation of employment preservation programs, and improve the social protection of the population. In the postpandemic period, developing economies will need to implement targeted fiscal and financial measures to stimulate growth in the export areas of the economy and tourism, most affected by the COVID-19 pandemic. The inevitable tightening of monetary policy when exiting the pandonomics will require developing economies, vulnerable to a decrease in the inflow of remittances, to conduct programs to support access to social services for migrants and their families. The ongoing pandemic will require governments of developing economies to prepare for possible outbreaks of economic instability and the Kazakh version of the socio-economic scenario.

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Remote Justice Procedures During the COVID-19 Pandemic in the Russian Federation Julia S. Karpova and Olga I. Miroshnichenko

Abstract

The paper aims to form a theoretical model for ensuring the accessibility of justice for participants in the trial through online meetings by solving specific problems in the development of procedural arbitration legislation and the practice of its application. The research objectives are to prepare a scientific assessment of the risks and problems of online litigation through a web conference in the arbitration process and propose ways to improve the law enforcement practice of holding web conferences in arbitration courts. The key ways to achieve the research objective are to study the legal basis for holding online court meetings using online-conference systems; the judicial practice of applying the rules on the participation of parties in a court session through an online conference, using methods of a systemic approach and modeling; as well as formal legal and comparative legal methods. The accessibility of justice is one of the fundamental principles of judicial protection, which determines the purpose and general meaning of judicial activity. During the period of restrictions due to COVID-19, the judicial system of the Russian Federation has taken a significant step forward in the digitalization of justice, primarily in arbitration courts. The pandemic period had encouraged the judicial practice to form the online-conference system that will provide an opportunity for the parties to participate in the court session without physical presence. Within this research, based on the analysis of the procedure of online court sessions, the authors identified the risks of their conduct. J. S. Karpova (✉) Law Institute, People’s Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected] O. I. Miroshnichenko School of Law, Far Eastern Federal University, Vladivostok, Russia Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]

Based on the analysis of the current practice of arbitration courts, the authors revealed different and contradictory results. Courts misinterpret the rules of holding a court session using the online-conference system, particularly when parties break regulations while participating in such meetings. The paper raises problems caused by the lack of uniformity of law enforcement practice and different applications of the rules by the courts, regulating the relations of the parties to hold court meetings online using online-conferencing systems in the way of a possible violation of the rights of participants in the trial. The authors identified the risks associated with online court meetings. As a result of the research, the authors formulate proposals to optimize the practice of applying procedural law in terms of using online-conference systems to organize a trial online. Keywords

Arbitration process · Court session · Online conference · Arbitration · Online session · Litigation

1

Introduction

The restrictions associated with the spread of COVID-19 did not negatively affect the work of the Russian judicial system (Chernogor & Zaloilo, 2020; Valeev & Makolkin, 2020). On the contrary, the restrictions imposed during the period of self-isolation have become an impetus for the development of new technologies in courts, in particular, online meetings, and further informatization of the entire justice system. The Arbitration Court of the Yamalo-Nenets Autonomous District was the first court to post on its official website an information message about holding court meetings online from April 28, 2020. Thus, since the end of April 2020, arbitration courts have been actively holding trials through an online conference.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_15

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Meanwhile, one can currently claim the indispensability and importance of online meetings, which help prevent the spread of COVID-19 and ensure the right of participants in the arbitration process to participate in the court session. However, in practice, the trial participants are faced with problems due to the lack of uniformity of judicial practice and the different application of the rules by the courts regulating the relationship of the parties to holding an online meeting. In this regard, there arise new questions related to online meetings and their availability for all participants in the process, regarding its compatibility with key fundamental rights—the right to be heard in court, the right to defense, the right to effective judicial remedies, and the right for a fair trial (Gori & Pahladsingh, 2021). Ensuring the rights of participants in online litigation is impossible without minimizing the existing risks and eliminating the problems currently faced by participants in litigation. The further development of advanced technologies naturally requires the solution to the issues above. Otherwise, it can cause citizens to distrust the court, the quality, and objectivity of judicial activity, as well as distort society’s ideas about the role and significance of the judiciary (Vasilkova, 2018). Additionally, the digitalization of justice is attractive to investors and is a factor in the country’s economic development. This paper aims to form a theoretical model of accessibility for participants in the trial by solving the problem of the development of arbitration legislation and its practice.

2

Materials and Methods

The works of Byrom et al. (2020) Rossner et al. (2021), Valeev and Makolkin (2020), Rusakova et al. (2021) reveal issues of digital justice and other aspects of these issues. An analysis of judicial practice on this issue was carried out in the works of Vasilkova (2018) and Razveykina and Shikhanova (2021). The problems faced by the participants in the litigation when participating in them online are addressed in the works of Frazier et al. (2021), Gori and Pahladsingh (2021), Vildanova (2020), Kamaeva (2020), Koryakina and Khokhryakova (2020), Rusakova and Frolova (2022). The purposes and objectives set in the work determine the choice of research methods. During the research, the authors applied general scientific methods (analysis, synthesis, modeling, and functional method) and special legal methods (formal legal and comparative legal methods). Thus, the formal-legal method was used to analyze the legal basis for holding a court session online in civil proceedings in Russia, as well as to study the practice of arbitration courts. The comparative legal method was used in studying foreign

experience in conducting court meetings via video communication.

3

Results

3.1

Lack of Regulation

Until January 1, 2022, one of the problems was the lack of consolidation of the possibility of holding a trial online (via a web conference) at the legislative level, in connection with which the arbitration courts developed rules for holding online meetings independently and published them on their official websites. Meanwhile, this problem has been resolved; from January 1, 2022, Federal Law “On amendments to certain legislative acts of the Russian Federation” (December 30, 2021 No. 440-FZ) came into force, in accordance with which the regulations of the Arbitration Procedure Law of the Russian Federation, the Civil Procedure Law of the Russian Federation, the Administrative Procedure Law of the Russian Federation, and other legislative acts of the Russian Federation were amended to improve the procedure by using electronic documents in legal proceedings and ensure the right to remotely participate in court meetings using personal means of communication of users safely. Trial participants can participate in a court session using an online conferencing system if they file a petition and if the courts have the technical possibility of conducting an online conference, but they do not do so. The grounds for refusing to satisfy an application for participation in a court session via an online conference may be a lack of technical ability to participate in a court session using the online conferencing system or the discussion of the case in a closed court session. The law created a legal framework for using the available possibilities in courts, filing documents electronically, and remote participation in court meetings. Simultaneously, participants are not deprived of the right to submit paper documents in person and personally attend court meetings. The acts introduced into the legislation may be used at their own discretion. Thus, in the absence of a technical possibility to participate in a court session remotely, the parties have a right to participate in person, which guarantees the rights of citizens and legal entities for judicial protection. A number of papers have raised concerns or provided evidence of the adverse impact of the rapid transition to remote sessions on the ability of digitally excluded individuals to effectively participate in court sessions (Byrom et al., 2020). Addressing the experience of the UK, we note that, in accordance with the Coronavirus Act (the Act), which came into force on March 25, 2020, as a reaction to the COVID-19 pandemic, the decision to hold a meeting by telephone or

Remote Justice Procedures During the COVID-19 Pandemic in the Russian Federation

video can be enforced for several reasons and is made by a judge. In May 2021, the London High Court Judge, Mr. Mostyn, cited pandemic-entrenched online sessions practices and ruled that two asylum seekers were legally expelled as their right to a fair distribution had not been violated. In Turkey, according to the judge, the Internet works excellently, and even in the remote village where the deportee lives: “All he needs is a laptop and a Wi-Fi or data connection. In the unlikely event that they are unable to download the Zoom or Microsoft Teams apps, they can access Zoom or Teams via a browser; alternatively, the session may be held on the CVP platform developed by HMCTS, which is also accessed via a browser” (High Court of Justice of England and Wales, 2021). The possibility of granting the right to participate and access justice is provided, which leads to a fair decision. However, fairness can be undermined if the parties do not have reliable internet connections or devices (Rossner et al., 2021). Meanwhile, in the Russian Federation, the opportunity to participate in court proceedings via an online conference is provided only by the interest of the parties by considering their will.

3.2

Equivalence of Online Meetings to Face-to-Face Meetings

Having introduced virtual meetings in multiple courts, legal practitioners have begun to raise critical questions about the equivalence of virtual meetings to face-to-face meetings (Frazier et al., 2021). One of the apparent risks and the difference between an online meeting is the inability to remotely identify a person involved in the process (Matytsin et al., 2022). The risk of presenting falsified samples of documents on the identity and powers of the representative increases because the court is deprived of the opportunity to establish their authenticity by reviewing the original. In fact, the court is limited in resolving the issue of the possibility of participation of persons in a court session, establishing the identity of the participants in the process, and verifying their abilities (Kamaeva, 2020). Arbitration courts of Russia use the Unified Portal of Public Services [Gosuslugi] to identify participants. This portal operates on the Unified Identification and Authentication System. However, the portal does not guarantee the authenticity of the information provided by the participant in the online process; there is no opportunity to see originally submitted documents (Vildanova, 2020). Russia has not implemented a service for identifying litigants using biometric data, which could solve the problem of personal identification.

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Meanwhile, judicial practice (primarily arbitration proceedings) has not yet demonstrated problems associated with abusing power, indicating a critical vulnerability in identifying persons in the My Arbiter system used to ensure procedural guarantees of the parties or protect information. Additionally, following Part 5 of Article 158 of the Arbitration Procedure Law of the Russian Federation as amended (January 1, 2022), the arbitration court may postpone the trial if it recognizes that it cannot be considered at this court session, including that the court has reasonable doubts about the fact that a person who has passed identification or authentication is participating in the court session, or about the will of that person in case of technical problems when using technology to hold a session, including video conferencing systems or web-based conferences. Thus, the court has the right to postpone the court session if there is doubt about the identity of the person participating in the court session through a web conference or their will, which relatively guarantees the possibility of the court to influence the stated risk.

3.3

Postponing the Hearing Due to Communication Problems as a Possibility of Abusing Power and Delay of the Process

Due to the relevant practice of arbitration courts on the issues mentioned above, we believe it is possible to start with an analysis of the adopted judicial acts, based on which the problem was identified by the authors. Thus, by the decision of the Arbitration Court of the Primorye Territory in case No. A51-16998/2020 (September 21, 2021), the trial was postponed since a third party received a request to hold an online court session, which was not satisfied due to the late application and lack of technical ability to satisfy it (Primorsky Territory Arbitration Court, 2021). Thus, the third party influenced the delay of the process by not filing a petition for holding an online court session in advance, which allowed the third party to postpone the trial without regulations established by the procedural legislation. Meanwhile, it is worth mentioning that there is no deadline for applying for participation in an online meeting. However, in practice, courts refuse to hold an online meeting if an application has been violated. For example, the Arbitration Court of the Udmurt Republic indicated that an application for participation in an online meeting is to be submitted no later than five business days before the court session (ruling in case No. A71-3578/2015 (October 8, 2020). Some courts proceed from the fact that such an application is to be submitted at least ten days in advance (Arbitration Court of the Udmurt Region, 2022).

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We believe that to eliminate discrepancies in judicial practice, it is necessary to establish the exact period for submitting an application at the legislative level. The foregoing will minimize the risk of abusing power by the participants in the trial and the possibility of delaying the consideration of the case.

3.4

Unjustified Refusal to Satisfy the Parties’ Petitions for Participation in the Court Session Through the Web Conference System

We believe it is possible to start with an analysis of judicial practice on this issue. Thus, the Arbitration Court of the Kemerovo Region refused to hold an online meeting in case No. A27-16134/ 2019 on the following grounds: “Reason for rejection: the representative is in self-isolation” (Arbitration Court of the Kemerovo Region, 2021). Meanwhile, there is no causal relationship between the fact that the representative of the party is in self-isolation and the inability of the parties to participate in the court session via a web conference. Thus, a fairly common reason for rejecting a party’s petition to participate in a court session via a web conference is the lack of the necessary time to hold it, which cannot be called a reasonable ground for refusing to satisfy the petition because such a ground is not provided for by the procedural legislation. Thus, by the decision of the Arbitration Court of the Krasnodar Territory in case No. A32-47952/2021 (January 26, 2022), the applicant was denied the request to hold an online court session in the web conference because, at the time of the receipt of the application by the court, the schedule of court sessions did not provide additional time costs for holding a court session in the online session mode, consideration of the case in the online session mode will lead to a violation of the time limit for consideration of the subsequent case (Arbitration Court of the Krasnodar Territory, 2022). Some courts have rejected applications to participate in web conference proceedings because applicants are entitled to provide a position and, in the opinion of the courts, this is sufficient to exercise their rights without the participation of the parties in the litigation (Inshakova, 2021). By the ruling of the Arbitration Court of the Krasnodar Territory in case No. A32-42523/2017 (November 25, 2021), the application for holding a court session in the web conference mode was denied since the receipt of a petition for holding an online session may indicate the objective impossibility of attending the court session (Arbitration Court of the Krasnodar Territory, 2021a). Meanwhile, the applicant is not deprived of the opportunity to submit a position regarding the stated requirements in electronic form.

In the ruling in case No. A32-18505/2021 (July 1, 2021), the Arbitration Court of the Krasnodar Territory refuses to hold an online meeting due to the specifics of bankruptcy cases, including the identification of a wide range of participants in the process and the difficulty of initiating them, including non-professional participants in the process (Arbitration Court of the Krasnodar Territory, 2021b). Thus, referring to the analysis of judicial practice, it is possible to identify various grounds for refusing to initiate a criminal case in a criminal trial. The proposal to assign a distant event and non-compliance due to compliance with the procedure is granted the right to review in the online review. Meanwhile, the foregoing may be delayed on the violation of the rights of the parties to the investigation accessibility. However, the foregoing study is unacceptable within the scope of this paper.

3.5

Unsettled Procedure for Providing Evidence to the Court by Persons Participating in the Case

Online litigations present a number of procedural difficulties. Thus, participants are deprived of the opportunity to present written evidence and video and audio recordings during the meeting. They also cannot quickly get acquainted with the evidence provided by other participants during the court session. Additionally, the technical support for the operation of this system remains imperfect: there are problems with uploading documents to the system, synchronizing data from the Unified Portal of Public Services and the My Arbiter system, and other technical failures, which entail negative consequences in the form of the inability to participate in the process, violation of deadlines, etc. Thus, despite the significant period of operation of the My Arbiter system, there is a pattern of technical unpreparedness of the judicial system for several objective reasons of a technical nature (Razveykina & Shikhanova, 2021). Meanwhile, all listed difficulties that the parties face in practice when expressing their will to participate in the trial online are undoubtedly leveled by the merits of online meetings.

4

Conclusion

Advanced technologies improve the efficiency and quality of the administration of justice and ensure the implementation of the principles of openness, publicity, accessibility, and legality of justice, as well as the exercise of procedural rights by participants in legal proceedings.

Remote Justice Procedures During the COVID-19 Pandemic in the Russian Federation

Meanwhile, to continue the sustainable development of online litigation, it is necessary to pay attention to the existing problems that participants in the meetings face in practice; direct efforts to solve these problems are required. Thus, the procedure for identifying a person participating in a trial through a web conference is subject to improvement, including the introduction of face identification services, including biometric indicators. Additionally, efforts should be directed to eliminate several problems faced by participants in the court session. First, it is necessary to ensure the uniformity of judicial practice in terms of the grounds for refusing to satisfy the petitions of the parties to the litigation to participate in the court session in the web conference mode. Second, at the legislative level, it is necessary to establish a period before the expiration of which the parties must file a petition for participation in a court session by using web conference systems. Third, it is necessary to regulate at the legislative level the procedure for providing evidence to the court by persons participating in the case when they participate in the trial using web conference systems. The introduction of advanced information technologies in legal proceedings is an irreversible phenomenon that affects all key aspects of judicial activity—improving the quality of consideration of cases, improving the forms and methods of organizing the work of courts, and increasing the openness of justice to society. The main result of this research is a model for the further development of Russian arbitration procedural law in theoretical and practical aspects. Acknowledgments The research was carried out with the financial support of the Grant from the President of the Russian Federation No. NSh-3270.2022.2 “Evolution or revolution of civil justice: digitalization through the prism of artificial intelligence.”

References Arbitration Court of the Kemerovo Region. (2021). Court ruling in case No. A27-16134/2019 dated October 21, 2021. Kemerovo, Russia. Accessed January 28, 2022, from https://kad.arbitr.ru/Card/ e2516e62-beb5-4846-9e89-c6b7323bf03a Arbitration Court of the Krasnodar Territory. (2021a). Court ruling in case No. A32-42523/2017 dated November 25, 2021. Krasnodar, Russia. Accessed January 28, 2022, from https://kad.arbitr.ru/Card/ c829546e-415f-4a92-b644-2806396144b0 Arbitration Court of the Krasnodar Territory. (2021b). Court ruling in case No. A32-18505/2021 dated July 21, 2021. Krasnodar, Russia. Accessed January 28, 2022, from https://kad.arbitr.ru/Card/ 5fa15184-7567-41a6-b047-06f42bed019a Arbitration Court of the Krasnodar Territory. (2022). Court ruling in case No. A32-47952/2021 dated January 26, 2022. Krasnodar, Russia. Accessed January 28, 2022, from https://kad.arbitr.ru/Card/ 512f7d21-c635-4e10-b47b-36a0e31fab7a

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Arbitration Court of the Udmurt Region. (2022). Court ruling on August 23, 2021 in case No. A71-3578/2015. Izhevsk, Russia. Accessed January 28, 2022, from https://kad.arbitr.ru/Card/d6b2b930-ca884f65-b1fb-7c93ce2d1089 Byrom, N., Beardon, S., & Kendrick, A. (2020). The impact of COVID19 measures on the civil justice system: Report and recommendations. Shalford; Guildford, UK: Civil Justice Council and Legal Education Foundation. Accessed January 28, 2022, from https://www.judiciary.uk/wp-content/uploads/2020/06/CJC-RapidReview-Final-Report-f.pdf Chernogor, N. N., & Zaloilo, M. V. (2020). Metamorphoses of law and challenges to legal science in the context of the coronavirus pandemic. Journal of Russian Law, 7, 5–26. Frazier, A., Mulligan, K., Dipano, M., & Turner, K. (2021). Courts of the future? Quantifying the impact of technical problems on virtual court hearings (preprint). Psychology & Law Research Lab. https:// doi.org/10.13140/RG.2.2.35973.27361/1 Gori, P., & Pahladsingh, A. (2021). Fundamental rights under COVID19: A European perspective on videoconferencing in court. ERA Forum, 21(4), 561–577. https://doi.org/10.1007/s12027-02000643-5 High Court of Justice of England and Wales. (2021). Arman & Anor, R (On the Application Of) v Secretary of State for the Home Department [2021] EWHC 1217 (Admin) (13 May 2021). London, UK. Retrieved from https://www.bailii.org/ew/cases/EWHC/ Admin/2021/1217.html (Accessed 28 January 2022). Inshakova, A. O. (2021). Digital technologies of scientific analytics of actual data on the epidemic of new coronavirus infection COVID-2019. Legal Concept, 19(3), 140–143. https://doi.org/10. 15688/lc.jvolsu.2020.3.20 Kamaeva, A. V. (2020). Online sessions – A forced measure or the future of the judicial system? Modern Trends in the Development of Civil and Civil Procedural Legislation and the Practice of its Application, 6, 196–202. Koryakina, K. G., & Khokhryakova, O. V. (2020). Legal analysis of the risks of using the web conference system in the arbitration process. Bulletin of Arbitration Practice, 3, 12–18. Matytsin, D. E., Goncharov, A. I., & Inshakova, A. O. (2022). Preventive and proactive measures to protect the rights of consumers of entertainment services. In A. O. Inshakova & E. E. Frolova (Eds.), The transformation of social relationships in industry 4.0: Economic security and legal prevention (pp. 209–220). Information Age Publishing. Primorsky Territory Arbitration Court. (2021). Court ruling on dated September 21, 2021 in case No. A51-16998/2020. Vladivostok, Russia. Accessed January 28, 2022, from https://kad.arbitr.ru/Card/ 47b4e6a1-2b75-49c3-9799-33cc398c7990 Razveykina, N. A., & Shikhanova, E. G. (2021). Transformations of legal proceedings in Russia provoked by the pandemic. Bulletin of the OmGU. Series. Law, 4, 50–58. Rossner, M., Tait, D., & McCurdy, M. (2021). Justice reimagined: Challenges and opportunities with implementing virtual courts. Current Issues in Criminal Justice, 33(1), 94–110. https://doi.org/10. 1080/10345329.2020.1859968 Rusakova, E. P., & Frolova, E. E. (2022). Introduction of digital methods of protection of rights as a legal guarantee of business activity in the modern world (on the example of China). In A. Inshakova & E. Frolova (Eds.), Smart technologies for the digitization of industry: Entrepreneurial environment (pp. 121–130). Springer. https://doi.org/10.1007/978-981-16-4621-8_10 Rusakova, E. P., Frolova, E. E., & Inshakova, A. O. (2021). Legal regulation of Internet courts in China. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 1515–1521). Springer. https://doi.org/10.1007/978-3-030-69415-9_167

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National Health as a Condition and Factor of Economic Growth: Legal Aspects Vlada Yu Lukyanova

Abstract

The paper provides a systemic account of scientific views on the strategy and challenges of legal regulation of healthcare and public health in the Russian Federation while showing their impact on the economic and social development of the country. The author examines global trends in the conceptual foundation of state regulation of healthcare and public health that have come to light in recent decades, with an increase in disability and mortality caused by lifestyle diseases and behavioral patterns. The paper analyses the interpretation characteristics of such trends in the Russian legal reality, factoring in the Russian Constitutional Reform of 2020. The main approaches to the way of holding the state and citizens responsible for health, developed in legal science and practice, are studied, taking into account historical data. The paper also shows how the digitalization of various areas of life affects the development of the public health system and offers some insights into it. Following the study, the author talks about the legal possibility of eliminating the factors that have a negative impact on public health, which is a significant factor in the development of the Russian economy. Keywords

Legal regulation · Right to healthcare · Public health · Economic activity · Responsibility for health · Behavioral risk factors · Deregulation paradigm · Concept of optimization of the state regulation of economy · COVID-19

JEL Codes

I10 · I12 · I18 · J00 · K10 · K38 · O15 V. Y. Lukyanova (✉) The Institute of Legislation and Comparative Law under the Government of the Russian Federation, Moscow, Russia

1

Introduction

The health of a nation is a complex social, economic, medical, and demographic phenomenon. This phenomenon can significantly affect the direction of and changes in the processes of economic and social development of society and the country. The world currently faces fundamental changes in the architectonics of the global economic system because it is transitioning to a new technological paradigm. In this new world, a person’s health, intellect, and creative potential may become just as significant for the development of the country as access to fuel, energy, and raw material resources, in other words, a key factor in the equitable integration of each state into the global economic system. These conditions dictate a new, central role for the value of health, which society must now prioritize. That is why law, which is, according to Pierre Bourdieu, “the quintessential form of “active” discourse, able by its own operation to produce effects” (Bourdieu, 2007), had to include this phenomenon in its scope of interests. The research seeks to cover the mutual influence of the current state of public health and its determinants, on the one hand, and processes of economic and social development of the country, on the other hand. It also aims to determine whether the law can adjust the dynamics and direction of such mutual influence, being the regulator of social relations when it comes to public healthcare. The research thus achieves the following objectives: • The mutual influence of public healthcare activities and social and economic development processes of the country was investigated, with such influence aimed at fostering this development; • The status and trends of international and national legal regulation in healthcare and public health were analyzed; • The basic idea behind the distinction between the responsibility for health assumed by a person and the state was explored;

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_16

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• The influence of the “mindset” dominating the society on the general state of public health and the direction of and changes in social and economic development processes was studied.

2

Methodology

Works of Russian general and sectoral researchers serve as the doctrinal basis for the research (Dudin et al., 2017; Dudin et al., 2017; Inshakova, 2021). The regulatory framework comprises the provisions of international legal acts regulating the observance and protection of human rights, as well as legislative acts regulating healthcare and public health adopted by the Russian Federation, the USSR, and foreign countries. The research methodology is based on formal-legal, comparative-legal, historical-legal, and systemic methods. The study of public healthcare in the light of the impact of nation’s and individual’s health on the economic and social development of the country is based on a systemic and structural analysis of Russian health legislation, international legal acts, acts of Russian and foreign legislation regulating the protection of human rights in general and the right to health protection in particular, as well as the precedents in its application, the practice of its application, and critical examination of the main findings of scientific and analytical research relating to public health issues and their impact on economic development. A comprehensive approach to study allowed the author to identify global trends in the conceptual foundation of state regulation of protection of public and individual health that have come to light in recent decades. As the author used comparative-legal and historical-legal methods to research the Soviet and foreign experience in regulating public healthcare, the constitutional legislation of the most economically developed countries was studied first. This played an important role in comparing the dynamics and peculiarities of the legal regulation of public and individual health protection, as well as in identifying factors that threaten public health in the country and prevent the phenomenon of public health from becoming a driving force of economic and social development of the Russian Federation. The formal-legal, comparative-legal, historical-legal, and systemic methods played a significant role in determining the ways healthcare legislation can be improved.

3

Results

1. Health is a person’s most valuable treasure. It is a criterion of a person’s wellness, success, and strong social standing. Health is the main driver behind a worker’s concentration,

stamina, and overall physical and mental condition, which affects their performance and disposition to certain types of economic activity. A flippant attitude towards health sometimes leads to tragic consequences, and its loss overshadows almost all other social benefits. Apart from that, the current health of people greatly impacts their health tomorrow and has a pronounced hereditary effect, a factor influencing (and even predetermining) the health of future generations. That is why during the history of humankind, the relations between the patient and the doctor almost always were regulated by legal norms. In particular, even the ancient Code of Hammurabi established the amount of remuneration that a doctor received for rendering different types of medical assistance and the doctor’s responsibility for damaging the patient’s health to various extent. As the civilization developed and the ideas of humanism and justice spread through the world, healthcare issues were more and more frequently viewed as part of the core human rights and freedoms. Nowadays, the Universal Declaration of Human Rights and other international legal acts on human rights state that “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including . . . medical care and necessary social services, and the right to security in the event of . . . sickness, . . .” (UN General Assembly, 1948). International Covenant on Economic, Social and Cultural Rights dated December 16, 1966, indicates that the countries that ratified it should “recognize the right of everyone to the enjoyment of the highest attainable standard of physical and mental health” and defines the “steps to be taken by the States Parties to achieve the full realization of this right” (UN General Assembly, 1966) Moreover, these and other international legal acts proclaim life and health to be the priority value, the protection of which excuses the limitation of other civil, economic, and social rights, such as the right to freedom of expression, including the freedom to seek, receive, and impart information and ideas of all kinds, the right to freedom of thought, conscience, and religion, etc. The provisions of international legal acts are developed and elaborated in national legal norms, first of all, in states’ constitutions. Simultaneously, since an individual cannot independently eliminate all factors negatively affecting their health (Sharabchiev, 2015), many countries make it a mission to establish citizens’ rights and guarantees for healthcare in the principal laws and define the state’s responsibilities in this realm. In some countries, the discussed norms are declarative. For example, the Constitution of Japan commands the state to “use its endeavors for the promotion and extension of . . . public health” (Japan, 1947) Other countries, like the Swiss

National Health as a Condition and Factor of Economic Growth: Legal Aspects

Confederation, define core spheres that must be regulated by the state to protect citizens’ health, and introduce some institutes of medical law related to new converging NBIC technology (Inshakova et al., 2021). Another set of countries (e.g., the People’s Republic of China) defines the main directions of economic and other activities, which should be supported and developed by the country to increase the efficiency of healthcare. The Constitution of the Russian Federation enshrines the right of everyone to health protection and medical care. It also indicates the obligation of the country to finance federal programs for the protection and promotion of public health and the need to take measures to develop the state, municipal, and private healthcare systems (Inshakova, 2021). Additionally, it dictates the need to establish the responsibility of officials for concealing facts and circumstances that pose a threat to the life and health of people. Moreover, concealment in this context is not only the withholding of information but also the dissemination of unreliable, deliberately false information about the state of the environment, the sanitary and epidemiological state, and other events and circumstances that threaten people’s health. Citizens have the right to regularly receive reliable and timely information about factors that contribute to the preservation of health or have a harmful effect on it, including information about the sanitary and epidemiological state of the area of residence, rational nutritional standards, products, works, services, their compliance with sanitary norms and rules, etc. This information is provided by the local administration through the media or directly to citizens at their request. Constitutional provisions are elaborated in the different federal laws, codified acts imposing criminal or administrative liability for associated offenses, and other legal norms. 2. Researchers (Salagay & Soshkina, 2020; Sharabchiev, 2015) note that non-communicable diseases, often caused by destructive behaviors (e.g., alcohol and tobacco use, self-harm, disregard for safety in the workplace), are becoming increasingly common in many countries worldwide. Consequently, the paradigm stating that the country alone is responsible for a citizen’s health by developing the necessary medical capacities is giving way to a different concept. It is a person responsible for their health first and foremost. It is a person who must refrain from behavior that could be detrimental to their health. The country is responsible for creating conditions for protecting and improving people’s health. In its turn, the country forms a “field of opportunities” with its instructions, which helps citizens act accordingly and creates a “movement vector,” using administrative and tax measures to this end. One of the most striking examples is the Federal law “On

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protecting the health of citizens from the influence of tobacco smoke and consequences of tobacco use or nicotine-containing products use” (February 23, 2013 No. 15-FZ). It does not prohibit tobacco smoking, but it establishes higher excise rates for tobacco products, allows the state to strictly regulate its retail prices, etc. (Russian Federation, 2013). As a result, more than 35.0% of smokers in Russia have attempted to quit smoking (33.4% of men and 39.3% of women) in the past 12 months (World Health Organization (WHO), 2016). During the Russian Constitutional Reform of 2020, the principle of personal responsibility for health has acquired the status of a constitutional principle. According to part 1 of Article 72 of the Constitution of the Russian Federation, creating conditions for a healthy lifestyle and fostering a culture of responsible attitudes towards health are areas of joint jurisdiction of the Russian Federation and subjects of the Russian Federation (Russian Federation, 1993). The development of constitutional amendments, which should encourage citizens to consider health and health care as a social value, requires changes in at least six federal laws. From a legal point of view, a healthy lifestyle includes four key aspects: • Countering tobacco use and protection from tobacco smoke; • Reducing alcohol use; • Encouraging physical activity; • Healthy eating (Matytsin & Anisimov, 2022). In this regard, legislative acts regulating the relevant social relations fall into the orbit of constitutional reforms. The Federal law “On education in the Russian Federation” (December 29, 2012 No. 273-FZ) also falls into this area (Russian Federation, 2012). This is important because upbringing and education allow a person to perceive the arguments justifying the need to abandon bad habits. Accordingly, a person’s rejection of unhealthy behavior patterns becomes conscious and, therefore, durable. 3. In the first decades of the twenty-first century, many countries returned to public health issues because they define “the potential and direction of the state’s productive powers, the capacity and specifics of its (state’s) inner goods and services market, export opportunities and structure, and, most importantly, the potential for geopolitical stability” (Kozin & Tsybusov, 2006). Public health and the economy, including separate sectors, are closely interconnected. Therefore, economic and other activities bring about new and induce old social and environmental issues, resulting in poor health for the population facing them (United Nations Department of Statistics, 2021). After all, the economy, in particular, industry, energy, and transportation, generates emissions and discharges of

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pollutants into the environment, a factor that negatively affects local ecosystems and people’s health. The human economic activity gave rise to such phenomena as occupational diseases, workplace injuries, and environmental diseases. Even though economic development eliminates factors negatively affecting human health and, therefore, public health, they are replaced by new ones, sometimes even more destructive. In part, the issues of overcoming the negative impact of these factors on human health are regulated by acts of environmental legislation, legislation on sanitary and epidemiological health of the population and territories, and legislation on industrial safety. However, the introduced regulators are insufficient. Under these conditions, countries (e.g., the United States, Japan, China, etc.) develop national programs to support public health and make it a factor in economic development as the world economic system transitions to a new technological model. Under the Russian Constitutional Reform of 2020, ensuring public health in Russia is viewed as a result of encouraging citizens to consider health and healthcare one of social values. However, these constitutional novelties are yet to be elaborated within the framework of the norms of the Federal law “On basics of health care of citizens in the Russian Federation” (November 21, 2011 No. 323-FZ) (Russian Federation, 2011) and other regulatory acts because the notion of “public health” is still non-existent in the Russian healthcare legislation. This notion was first written down in the Passport of the National Project “Demographics” (Presidium of the Council under the President of the Russian Federation for Strategic Development and National Projects, 2018), approved by the Presidium of the Presidential Council for Strategic Development and National Projects. Under this project, a separate line of action was defined: the federal project “Strengthening public health,” which emphasizes disease prevention and the development of a healthy lifestyle, including a healthy diet and avoidance of bad habits. However, the efficiency of public healthcare may decrease under the influence of various factors. One of these factors is certain categories of citizens abusing their personal non-property right to health and, in a number of cases, their disregard for public and personal health for the benefit of their individual social or economic rights. This factor became very visible during the COVID-19 pandemic. Thoughts of S. Yu. Filippova, Associate Professor, Chair of Commercial Law and Basics of Law Department at Lomonosov Moscow State University, can illustrate this very well. “The natural right to life is a core value,” says the Associate Professor. “However, what is more valuable in life: the biological life itself or its content? I believe that the world is not a hospital, and there are other values except for saving life and health.

Boundaries of a person’s autonomy and personal freedom, which in private law manifest themselves in the ability to enter into legal relations of their own free will and discretion, stipulate the ability and possibility of the subject to fill their life with content on their own: choose exactly what they want to do with their life. The right to life also entails the right to control that life, in particular, to risk it. . . . Seems like we should give people the right to life, as well as the right to risk their life, providing protection only on request” (Filippova, 2020). If we think of the scale of marches and other protests against “anti-COVID” measures, which took place in France and other European countries during the pandemic, we will have to admit that S. Yu. Filippova is not the only one thinking like that. However, neither she nor other “COVID dissidents” consider that the right to life and the right to control this life, which is stipulated in the Constitution of the Russian Federation, the Constitution of the French Republic, constitutions of other countries, and even the Universal Declaration of Human Rights, means the right to dispose of their life, not another person’s life. However, with the spread of diseases that pose a danger to others (e.g., COVID-19), a breach of safety rules by a citizen may entail a threat not only to the health and even life of the offender but also to others who may well not have intended to risk their lives at all. The public debate about vaccination against the COVID19 is quite indicative of that. Some researchers (Vinokurov, 2021) argue that the country does not have the right to require employers to ensure mandatory vaccination of 60%, 65%, or even 80% of employees; the employers, in their turn, do not have the right to require employees to get vaccinated. What advocates of this point of view do not consider is the fact that, in the case of COVID-19, it is not about vaccines that are administered according to the national immunization calendar, which can be considered medical activities, but epidemic vaccines, “the purpose of which is not only to safeguard the health of the individual but also to prevent the mass spread of the disease” (Putilo & Volkova, 2011). That is, it is about measures to contain the disease. They also dismiss the fact that the transformation of the right to preventive vaccination into an obligation to undergo vaccination most likely results from labor legal relationships, not public healthcare relationships. This leads us to the question: “What is the reason behind the emergence of people who are ready to risk public and private, individual health for the sake of fleeting pleasures or the mythical aspiration to “fill their life with their own content?” Considering that “health affects the key element of productive forces: the producers themselves” (Samutin, 2012), how does it affect the level and dynamics of economic development? In our opinion, the answer to these two questions is linked to two factors:

National Health as a Condition and Factor of Economic Growth: Legal Aspects

• The destructive influence of digitalization on various areas of the life of an individual and the society on the collective, individual, and personal identity of the person. In the research we conducted earlier (Lukyanova, 2022; Lukyanova, 2017), we have already noted that intensive development of digitalization processes leads to the “culture of the book” gradually turning into the “culture of the screen.” This leads to worldview being replaced with world perception; humanity leaves the rational ideal of knowing to the aesthetic and emotional one (Morgunov, 2013). We, humans, are no longer capable of shaping a comprehensive worldview, and, as a consequence, we lose our positions as subjects of right. Therefore, law regulators that operated earlier, addressing human willpower and mind, are not effective enough. Under these conditions, individual responsibility is almost never realized, which forces the government to require citizens to abide by the rules and act for the society’s benefit or to use other regulators, for example, extralegal and quasilegal; • The dominance of the “mindset” (Ganopolsky, 2001), which regulates the life of Russian society since the transition of the system of state management of the economy to the implementation of the “deregulation paradigm” (Khabrieva & Lukyanova, 2016), remains in the public consciousness. Two widely-known advertising slogans can be identified as the embodiment of this “mindset”: “because I’m worth it” and “don’t think about work— think about your life.” At any moment in time, people’s practical (everyday) activities are regulated by a “mindset” adopted by their society at a certain stage of its development and realized in the economic reality, social technology, the customary labor organization types, and the “mindset.” The popular motto “Labour is noble, courageous, and heroic” pretty much embodied the “mindset” that regulated the life of the Soviet people for many years and which was, let us emphasize, endorsed by many millions of Soviet people. This “mindset” was reflected in all areas of the life of Soviet society. In particular, it is this “mindset” that can be called one of the factors that contributed to the relatively low level of corruption in the Soviet Union. In economics, the rule of this “mindset” (“labor = heroism”) led to a number of workers neglecting personal protective equipment, which resulted in a high level of workplace injuries and occupational diseases. This, in turn, it led to a decline in public health and consequently had a negative impact on the social and economic development of the country. Under the Soviet paradigm of state management of the economy, the effect of the said “mindset” was partly offset by the state’s total control of economic agents.

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In the 1990s, when the country was “transitioning from building developed socialism to capitalism,” the “deregulation paradigm” was adopted by the country, and the society adopted the abovementioned “I’m worth it” “mindset.” The dominance of this paradigm and its corresponding “mindsets” has led to many negative social and economic consequences. That is why the “deregulation paradigm” is giving way to the concept (paradigm) of optimization in the area of state management of economics (Khabrieva & Lukyanova, 2016). However, the “I’m worth it” “mindset” continues to rule in the minds of Russian society, which entails, as we have already mentioned, their disregard for the principles of protection of public and individual health in favor of momentary wishes and preferences. This negatively affects public health and the country’s economy. Under these conditions, encouraging citizens to consider health, healthcare, and public health as one of the social values requires the development and introduction of medical and sanitary measures and the formation of a new “mindset” that corresponds to the concept (paradigm) of optimizing state management of the economy. Without a doubt, Federal law “On basics of health care of citizens in the Russian Federation” (November 21, 2011 No. 323-FZ) (Russian Federation, 2011), as the main and system-forming piece of legislation in healthcare, should reflect new goals of the society’s development in healthcare and determine and detail legal means of achieving them. However, lawyers, public administration bodies, and their officials are unable to solve this problem alone; philosophers, cultural figures, and the entire civil society should be involved as well.

4

Conclusion

The conducted analysis showed the following: 1. Public health and economic development are closely interconnected. On the one hand, public health, which reflects the state of the key element of productive forces, the producer, is one of the most important factors in the economic and social development of the country and the society and, consequently, the country’s competitive ability within the global economic system. On the other hand, it is the economy that lays the material and financial ground for developing the healthcare system and public healthcare. 2. Since the dawn of time, humankind has been trying to regulate healthcare issues with legal acts of various legal forces. Nowadays, a massive base of legal norms uniting international legal norms (universal and regional) and norms of national legislation (interpreted broadly in this case), first and foremost, states’ constitutions, is the legal basis of activities in healthcare. This massive base shows

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signs of a system that has two interacting subsystems: the international and the national one. 3. Nowadays, non-infectious diseases, which have become common due to behavioral risk factors related to a person’s lifestyle, are the main threat to the health of an individual and society. This leads us to the issue of separating responsibility for a person’s health between the country and the individual. Different countries offer different approaches to this separation. The Russian Federation is shaping the following approach: the country takes on the responsibility for creating the conditions for protecting and improving people’s health, creating legal tools and regulators that only indirectly affect human behavior, whereas citizens are responsible for taking care of their own health. As a result of the constitutional reform of 2020, this approach gained a sound legal basis in the form of part 1 of Article 72 of the Constitution of the Russian Federation. Further development of constitutional novelties that will encourage citizens to consider health and healthcare as one of the social values to ensure public health will require amending some federal laws containing regulators that are aimed at eliminating the impact of behavioral risk factors on human health. 4. Among other things, fostering digitalization, which transforms the “culture of the book” into the “culture of the screen” and influences people in a way that makes them unable to form a comprehensive world view, replacing it with a world perception and, consequently, losing the features of a subject of right, negatively affects the effectiveness of legal regulators that regulate the protection of public and individual health. Under these conditions, individual responsibility is almost never realized, which forces the country to require citizens to abide by the rules and act for the society’s benefit or use other regulators, for example, extralegal and quasi-legal. The situation in the Russian Federation is made more difficult due to the rule of “mindset” formed at the beginning of the 1990s under the influence of an almost complete rejection of state regulation of economic and other activities. The prevalence of this mindset in Russian society leads to disregard for the principles of protection of public and individual health in favor of momentary wishes and preferences. This negatively affects public health and the country’s economy. Under these conditions, encouraging citizens to consider health, healthcare, and public health as one of the social values requires the development and introduction of medical and sanitary measures and the formation of a new mindset. However, lawyers, public administration bodies, and their officials are unable to solve this problem alone; philosophers,

V. Y. Lukyanova

cultural figures, and the entire civil society should be involved as well.

References Bourdieu, P. (2007). Power law: The legal foundations of the field of sociology. Social space: Fields and practices. Aletheia. Dudin, M. N., Sertakova, O. V., Frolova, E. E., Artemieva, J. A., & Galkina, M. V. (2017). Development of methodological approaches to assessing the quality of healthcare services. Quality – Access to Success, 18(158), 71–78. Dudin, M. N., Sertakova, O. V., Frolova, E. E., Katsarskiy, M. I., & Voikova, N. A. (2017). Methodological approaches to examination of public health based on the “national health quality indicator” model. Quality – Access to Success, 18(159), 71–79. Filippova, S. Y. (2020). The coronavirus has gone. How do we get the law back now? Stat, 5, 42–52. Ganopolsky, M. G. (2001). Sustainable development of the region. Issues of methodology and socio-cultural context. Tyumen Scientific Centre SB RAS. Inshakova, A. O. (2021). Legal adaptation under the influence of industrial revolution on entrepreneurial activity and key components of ecosystem. Legal Concept, 20(1), 6–13. https://doi.org/10.15688/lc. jvolsu.2021.1.1 Inshakova, A. O., Baltutite, I. V., Epifanov, A. E., & Abesalashvili, M. Z. (2021). Biotechnology as a type of converged technologies in industry 4.0 and a source of increased danger in civil law of The Russian Federation. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 1558–1567). Springer. https://doi.org/10.1007/978-3-03069415-9_172 Japan. (1947). The Constitution of Japan (date effective May 3, 1947). Accessed February 5, 2022, from https://japan.kantei.go.jp/constitu tion_and_government_of_japan/constitution_e.html. Khabrieva, T. Y., & Lukyanova, V. Y. (2016). Law and economic activity. Social Sciences and Contemporary World, 3, 5–21. Kozin, N. D., & Tsybusov, A. P. (2006). Public health as a factor determining socio-economic Well-being. Bulletin of the Mordovian State University, 2, 10–16. Lukyanova, V. Y. (2017). On the issue of information rights of citizens. In N. A. Yastreb (Ed.), Philosophy of science and technology in Russia: Challenges of information technology (pp. 171–175). Vologda State University. Lukyanova, V. (2022). Socio-cultural genome of law: Digital transformation. SHS Web Conf., 134, 00077. https://doi.org/10.1051/ shsconf/202213400077 Matytsin, D. E., & Anisimov, A. P. (2022). Ensuring food security as a legal and technological problem. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 337–352). Springer. https://doi.org/10. 1007/978-981-16-4621-8_28 Morgunov, A. A. (2013). Homo informaticus as a heuristic model. Vestnik of Samara State University. Series: Economics and Management, 1(102), 157–163. Presidium of the Council under the President of the Russian Federation for Strategic Development and National Projects. (2018). National project of The Russian Federation “demography” (adopted December 24, 2018). Moscow, Russian. Accessed February 13, 2022, from https://национальныепроекты.рф/projects/ demografiya. Putilo, N. V., & Volkova, N. S. (2011). Normative legal support of rights and obligations of citizens in the field of immunoprophylaxis. Journal of Russian Law, 12(180), 30–38.

National Health as a Condition and Factor of Economic Growth: Legal Aspects Russian Federation. (1993). Constitution of the Russian Federation (adopted by nationwide voting on December 12, 1993 with amendments approved by nationwide voting on July 7, 2020). Accessed February 5, 2022, from https://rm.coe.int/constitution-ofthe-russian-federation-en/1680a1a237. Russian Federation. (2011). Federal law “on basics of health care of citizens in The Russian Federation” (November 21, 2011 no. 323-FZ). Moscow, Russia. Accessed February 5, 2022, from https://www.consultant.ru/document/cons_doc_LAW_121895/. Russian Federation. (2012). Federal law “on education in The Russian Federation” (December 29, 2012 no. 273-FZ), Moscow, Russia. Accessed February 5, 2022, from https://www.consultant.ru/ document/cons_doc_LAW_140174/. Russian Federation. (2013). Federal Law “On protecting health of citizens from the influence of tobacco smoke and consequences of tobacco use or nicotine-containing products use” (February 23, 2013 No. 15-FZ). Accessed February 5, 2022, from https://www. consultant.ru/document/cons_doc_LAW_142515/. Salagay, O. O., & Soshkina, K. V. (2020). The concept of personal responsibility for health: Legal aspect. Journal of Russian Law, 8, 94–104. https://doi.org/10.12737/jrl.2020.097 Samutin, K. A. (2012). Public health as an integral element of the national economic policy. Russian Journal of Entrepreneurship, 11(109), 131–136.

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Sharabchiev, Y. T. (2015). Public health of nation and individual health of a person. Medical Newsletter, 3, 18–25. UN General Assembly. (1948). Universal declaration of human rights (adopted by resolution 217A on December 10, 1948), Paris, France. Accessed February5, 2022, from https://www.un.org/sites/un2.un. org/files/2021/03/udhr.pdf. UN General Assembly. (1966). International covenant on economic, social and cultural rights (adopted by resolution 2200A (XXI) on December 16, 1966), New York, NY. Accessed February 5, 2022, from https://www.ohchr.org/sites/default/files/cescr.pdf. United Nations Department of Statistics. (2021). Population, surface area and density: Statistical yearbook. Accessed February 2, 2022, from https://unstats.un.org/unsd/publications/statistical-yearbook/ files/syb60/T02_Pop.pdf. Vinokurov, V. A. (2021). Problems of the implementation of legal provisions in vaccination in the conditions of an emergency situation or a high alert regime. Medical Law, 5, 3–10. World Health Organization (WHO). (2016, January 1). 2016 GATS country report Russian Federation (Executive summary). Accessed February 5, 2022, from https://www.who.int/publications/m/item/ 2016-gats-country-report-russian-federation-(executive-summary).

The COVID-19 Pandemic and Crisis as a Source of Global Risks to Sustainable Development Irina S. Zinovyeva , Elena A. Barmina and Svetlana Yu. Soboleva

, Larisa V. Shabaltina

Abstract

JEL Codes

Modern society was not ready for the negative impact and consequences of the COVID-19 pandemic. Apart from a high level of incidence and dissemination of the coronavirus infection and its negative effect on the health and life of people, the pandemic created threats to almost all spheres of life activities and sectors of the economy. It became a serious challenge for companies, sectors and entire countries, which were not able to deal with its consequences for a long time. Logistics supply chains were destroyed, many companies closed and entire spheres, e.g., tourism, faced a threat of disappearance. The influence of the COVID-19 pandemic and crisis has a global character. Analysis of the causes, consequences and measures of the fight against the pandemic requires the efforts of various specialists. The scientific novelty of this research lies in the systematisation of the specifics and characteristics of the global risks of the COVID-19 pandemic and crisis to sustainable development at the global level.

D81 · E03 · Е41 · F02 · F29 · O19

Keywords

Global risks · Sustainable development · COVID-19 pandemic and crisis · GDP · International coordination

I. S. Zinovyeva (✉) Voronezh State University of Forestry and Technologies named after G.F. Morozov, Voronezh, Russia E. A. Barmina Vyatka State University, Kirov, Russia e-mail: [email protected] L. V. Shabaltina Plekhanov Russian University of Economics, Moscow, Russia S. Y. Soboleva Volgograd State Medical University, Volgograd, Russia

1

,

Introduction

The coronavirus epidemic, which suddenly appeared at the end of 2019 and instantly spread to most countries, provoked a global and the largest economic crisis in human history and had an extremely negative impact on socio-economic processes in the world. Due to the pandemic measures and bans imposed, global production fell by an unprecedented 4.3% in 2020 (World Bank, 2021), and established national lockdowns inspired the collapse of the consumer market and transformed the consciousness of a large part of the population. The deep emotional shock caused by coronavirus infection has forced the population and the authorities to reconsider development priorities and radically change the assessment of risks and challenges facing society in the current environment, bringing to the fore the task of reducing morbidity and saving lives. And if in the “pre-COVID-19” period the main life risks were considered manageable, the COVID-19 crisis clearly showed that, despite the relatively high level of spiritual and technical development of mankind, the world community has so far turned out to be neither technologically nor psychologically ready to adequately and effectively resist the threat of such scale, and the measures taken to combat COVID-19 have caused much greater damage to the socio-economic sphere than the potential direct damage from morbidity and mortality of the population infected with the coronavirus. Sustainability of development at the global scale is reflected in the stable growth of world GDP, increase in social standards and reduction of environmental pollution. Global crises do not start from separate socioeconomic precedents of the national scale. They consist of the problematic aspects in each sphere, which are manifested most negatively during the emergence of circumstances and factors that

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_17

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lead to the impossibility of their further restraining. During the COVID-19 pandemic, price collapse in commodity markets led to the reduction of the GDP of countries that export oil, natural gas, metal and agricultural products (World Bank, 2022b). These countries face the problems of resource price fluctuations regardless of crisis; but global crisis phenomena are a catastrophe for their economies. Countries’ unpreparedness to deal with global crises leads to a quick growth of unemployment, which, in its turn, leads to an increase in social tension. The lack of human resources’ adaptability to the change of labour activities makes people who are least mobile and not oriented toward the acquisition of new skills and knowledge very vulnerable in the case of new socioeconomic challenges. The entrepreneurial sector, which traditionally functions with the use of external financing, faces the risks of growth of credit interest rates and, accordingly, the absence of prospects for development. Accumulated environmental problems during the mass growth of unemployment and closure of companies due to bankruptcy might seem less important – which is also a threat. On the other hand, the experience of dealing with global crises allows forming new practices in the sphere of state management and entrepreneurial activity, to implement the Sustainable Development Goals. These practices may be adaptable under the conditions of global crisis phenomena in the world.

2

Priya et al. (Priya et al., 2021) is devoted to the study of the effects of the COVID-19 pandemic on the world economy, energy sector and climate protection. The authors presented results that showed that the pandemic had a destructive effect on mankind, industrialisation and sectors of the economy connected with resource production and export. Tian and Li (Tian & Li, 2022) described problems and drawbacks of globalisation processes that were manifested during the pandemic and focused on the necessity for international coordination in the resolution of a range of economic and social problems. Comparing the current coronavirus pandemic with an outbreak of SARS, Zandi (Zandi, 2020) points to the higher prevalence of coronavirus but believes that China’s costs in both cases will be approximately the same. This optimism is due to the significantly larger resources that the Chinese government intends to use to stabilize the economy. Beck (Beck, 2020) argues that the adverse effects of solvency in the financial system are unlikely to be detected immediately, so there will be time to prepare informed decisions. The structure of our study consistently includes a review of estimates and empirical justifications for the negative impact of pandemics on the economy; analysis of the economic consequences of COVID-19, conducted in the world studies; identification of acute problems arising from the pandemic, and justification of further research aimed at developing measures to mitigate its negative economic effects.

Methods/Literature Review 3

The issues of the impact of the COVID-19 pandemic and crisis on global challenges to sustainable development began to be researched right after the appearance of this global threat. In (Mou, 2020), the authors perform a comprehensive substantiation of the connection between globalisation and mass dissemination of the COVID-19 pandemic, with the evaluation of the processes of dissemination of infection, which many problems for the functioning of economic sectors in the usual regime. The authors of (Kolahchi et al., 2021) analyse sectoral changes connected with the negative influence of the dissemination of the COVID-19 pandemic, in particular in the mining industry, due to the reduction of demand for fossil resources, and in tourism (with the emphasis on the closure of borders and social distancing requirements), financial sphere and air transportation. Shang et al. (Shang et al., 2021) presented a comparative analysis of the stability of the capitalistic system and the system that is based on comprehensive state regulation in the face of global crisis challenges. The advantages of the latter are proven, with the analysis of effective support for the social sector.

Materials

Studies show a high degree of heterogeneity of infectious diseases that can become epidemics (in terms of transmission, prevention, treatment and short-term and long-term economic consequences), so each case of a pandemic is unique in terms of its paralyzing impact on economic systems. Bloom and Canning (Bloom & Canning, 2006) point out that often the direct costs of pandemics are obvious, but the long-term are not. Prevention of pandemics requires overcoming some obstacles, as well as responding to the epidemic after its occurrence. From our point of view, on a global scale, long-term vulnerability to pandemics will decrease with increasing development standards, but increasing globalization may contribute to the emergence and widespread of pandemics. Researchers at Harvard University point to the non-trivial economic risks of pandemics and the serious consequences for the economy, even in cases where morbidity and mortality are relatively low; for example, during the Ebola virus disease in Liberia in 2013–2014, GDP fell by 8% (Bloom et al., 2018). The economic consequences of pandemics are

The COVID-19 Pandemic and Crisis as a Source of Global Risks to Sustainable Development

delayed, which is partly due to the uneven distribution of resources. Thus, pharmaceutical companies benefit from vaccine production, while companies providing life insurance and health insurance, on the other hand, incur the highest losses in the short term. We believe that as climate change and population density in the cities of least developed countries due to deteriorating demographics, epidemics will become more common, indicating the need to incorporate this factor into the model of economic growth and take it into account in conceptualizing and developing economic policy measures. Given the high cost of research and development of vaccines with significant uncertainty about the payback of these costs (due to the low probability of demand for individual vaccines, the likelihood that the epidemic will occur and, more importantly, recur), pharmaceutical companies are in no hurry to invest in. In other words, “the interest in making a profit is inconsistent with the social interest in minimizing the risk of spreading these diseases” (Bloom et al., 2018). Therefore, it is necessary to develop a conceptual framework for international cooperation that will increase preparedness for the epidemic at least at the level of the formation of centralized stocks of vaccines. We believe that international cooperation has an advantage over national measures, as many countries (now developed) will be in particular need of measures to combat the epidemic, and the global public good called “living without fear of pandemics” should motivate both international cooperation and distribution of cost to combat pandemics between countries.

4

Results

Let us consider the dynamics of change in real GDP for 2019–2022 and the forecast for 2023–2024 (Table 1). It should be noted that traditionally during booms there is a tendency to displace real economic activity. As a result, resources are distributed unevenly during crises, after which the economy must reorient to more productive sectors and companies, which is often hampered by credit crises and deflationary pressures. These cycles also widen the demand gap, increasing inequality, and austerity measures taken in

Table 1 Dynamics of change in real GDP (as a percentage compared to the previous year) World Advanced economies United States Euro area Japan

2019 2.6 1.7 2.3 1.6 -0.2

2020 -3.3 -4.6 -3.4 -6.4 -4.6

2021 5.7 5.1 5.7 5.4 1.7

2022 2.9 2.6 2.5 2.5 1.7

2023 3 2.2 2.4 1.9 1.3

Source: Compiled by the authors based on (World Bank, 2022a)

2024 3 1.9 2 1.9 0.6

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response to the crisis, are making most households poorer, widening the gap with the super-rich. The historical experience of major epidemics and natural disasters convincingly shows that short-term economic losses can be significant. As indicated by (Smith et al., 2019), there are already many cases of the so-called “multisectoral” impact of outbreaks of infectious diseases, which, in addition to the health care system, cover such segments as tourism and travel, trade and transport, and environmental services. A direct sign of the pandemic’s impact on the economy is the loss of consumer and investor confidence. No less significant is deflation of assets, weak aggregate demand, rising debt burden and uneven distribution of household income. The analysis of the specialized literature allows systematizing and allocating key channels of destructive economic consequences of a coronavirus: On the Demand Side Decreased incomes combined with changes in consumer attitude against possible layoffs will negatively affect private enterprises, especially in the services sector (tourism, catering, entertainment industry). Risks and uncertainty as a result of the pandemic lead to a reduction in household consumption, as savings are postponed “on a rainy day”. Classic monetary policy can address the traditional (Keynesian) effects of the crisis, but in the current situation, as a result of the policy of “Quantitative Easing” and lower interest rates, the growth of aggregate demand is likely to be moderate, as countries are overloaded with debt and new incentives there is no growth in effective demand. In addition, in a pandemic, the demand (and costs) of households for basic necessities are formed, which is an additional factor of uncertainty with the demand and solvency of households in the short term. From the Supply Side The sudden production halt in the most epidemically affected regions creates a narrow global value chain, and the duration and scale of COVID-19 suggest that stocks that could temporarily support supply have already been depleted. Mass closures of enterprises with disruption of global value chains due to a lack of intermediate resources are possible even in areas that are weakly prone to the spread of coronavirus. Exports of raw materials and finished products will begin to decline sharply, affecting income and employment. As a result of the pandemic, large corporations may default (primarily tourism and airlines are likely to be affected by other industries), leading to a freeze on liquidity (as in 2008) and a devaluation of investment portfolios in the most sensitive sectors. According to experts, the liquidity crisis is causing losses primarily to peripheral countries that have their currency, the exchange rate of which will collapse, encouraging the jump into reserve currencies - the euro and the dollar.

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From the Financial Stability The growing risks of COVID19 and the jump to liquid assets in the context of this risk are already adjusting the stock, bond and currency markets, which has led to their sharp volatility. In terms of these risks for 2008–2019, the total amount of debt (debts of the private, public and financial sectors) increased from 152 to 255 trillion dollars, which is twice the world GDP (World Bank, 2021). The developing countries will be in the most critical situation: countries exporting raw materials with high levels of debt and human reserves, which tend to decline. However, after the crisis of 2008, the corporate sector in developed countries was actively increasing debt. Thus, the shortage of demand in the global economy due to rising income inequality in the context of COVID-19 is complemented by supply shocks (as businesses face serious difficulties due to the disruption of global value chains) and financial instability, increased unresolved debt crises in developing countries due to global recession of 2008.

5

Conclusions

It is also important to evaluate the impact of COVID-19 in the context of economic globalization, assuming that a growing pandemic may reinforce nationalism, and isolationism and promote a retreat from economic globalization. But in contrast, the pandemic could lead to a surge in international cooperation, similar to the post-World War II period. Anyway, COVID-19 can be described as a crisis of global governance and globalization, the perception and role of which will change significantly in the future. As a result of 50 years of interconnected growth, the world has been open to crossborder flows of goods/services, capital, citizens, and data, but as a result, the world economy has become vulnerable and fragile. Such a system is particularly vulnerable to epidemics, natural disasters and other disruptions, as the most important functional roles in this system are overconcentrated and the shocks experienced by centres (such as China or the US) can paralyze the world economy: this is why the 2008 recession was so destructive, and COVID-19 could have more serious economic consequences. The COVID-19 pandemic has for some time overshadowed all the world’s concerns and even existential challenges. The attitude to the issue of sustainable development has moved to the zone of “delayed demand”. Analysis of the considered consequences of the pandemic on the global economy and sustainable development may allow for avoiding similar destructive effects in the future. This will require regional and global projects of cooperation in various spheres, which would involve quick territorial reactions to

certain challenges. International partnership in this direction has large perspectives in preventing new crises, due to the use of the leading tools of the digital economy (forecasting, Big Data analytics, robotization, etc.). Partner countries may participate in the creation of new methods of diagnostics and prevention of virus dissemination that would allow avoiding the closure of international borders. The focus on such measures would allow supporting economic growth even in the face of new challenges and risks caused by mutations of COVID-19 or new viruses.

References Beck, T. (2020). Finance in the times of coronavirus. Economics in the Time of COVID-19. Bloom, D. E., Cadarette, D., & Sevilla, J. P. (2018). Epidemics and economics. Finance and Development, 55(2), 46–49. Bloom, D. E., & Canning, D. (2006). Epidemics and economics. PGDA working paper, 9. Program of the Global Demography of Aging, p. 27. Kolahchi, Z., De Domenico, M., Uddin, L. Q., Cauda, V., Grossmann, I., Lacasa, L., Grancini, G., Mahmoudi, M., & Rezaei, N. (2021). COVID-19 and its global economic impact. Advances in Experimental Medicine and Biology, 1318, 825–837. https://doi.org/10.1007/ 978-3-030-63761-3_46 Mou, J. (2020). Research on the impact of COVID19 on global economy. IOP Conf. Series: Earth and Environmental Science, 546, 032043. Accessed January 29, 2023, from https://iopscience.iop. org/article/10.1088/1755-1315/546/3/032043/pdf. Priya, S., Cuce, Е., & Sudhakar, К. (2021). A perspective of COVID 19 impact on global economy, energy and environment. International Journal of Sustainable Engineering, 14(6), 1290–1305. https://doi.org/10.1080/19397038.2021.1964634 Shang, Y., Li, H., & Zhang, R. (2021). Effects of pandemic outbreak on economies: Evidence from business history context. Frontiers in Public Health, 9, 632043. https://doi.org/10.3389/fpubh.2021. 632043 Smith, K. M., Machalaba, C. C., Seifman, R., Feferholtz, Y., & Karesh, W. B. (2019). Infectious disease and economics: The case for considering multi-sectoral impacts. One Health, 7, 100080. https://doi. org/10.1016/j.onehlt.2018.100080 Tian, S., & Li, X. (2022). COVID-19’s economic impact and countermeasures in China. COVID-19’s Economic Impact and Countermeasures in China., 15, 291–305. World Bank. (2021). World development report 2021: Data for better lives. World Bank. https://doi.org/10.1596/978-1-4648-1600-0 World Bank. (2022a, June). Global economic prospects. World Bank. https://doi.org/10.1596/978-1-4648-1843-1 World Bank. (2022b). Impact of COVID-19 on Commodity Markets Heaviest on Energy Prices; Lower Oil Demand Likely to Persist Beyond 2021. Accessed January 29, 2023, from https://www. worldbank.org/en/news/press-release/2020/10/22/impact-of-covid19-on-commodity-markets-heaviest-on-energy-prices-lower-oildemand-likely-to-persist-beyond-2021. Zandi, M. (2020, February). Coronavirus: The global economic threat, Moody’s analytics.

The Economic Impact of COVID-19 on the Development of Tour Operating in the Siberian and Far Eastern Federal Districts Evgeny V. Konyshev

and Anna K. Lutoshkina

Abstract

The paper aims to analyze regional features of the impact of the COVID-19 pandemic on the development of tour operating in the Siberian and Far Eastern Federal Districts (SFD and FEFD). The choice of the Siberian Federal District and the Far Eastern Federal District as the basis for the study is not accidental. On the one hand, efforts have been made in recent years to develop tourism in Siberia and the Far East. On the other hand, negative manifestations of the COVID-19 pandemic (self-isolation, reduced mobility, and falling inbound tourist flow) could be more pronounced in these regions due to remoteness and lower market capacity than in the regions of the European part of Russia. The relevance of this research is due to the key importance of tour operating for the development of the tourist market. The COVID-19 pandemic affected all segments of the tourist market. The research aims to analyze regional features of the impact of the COVID-19 pandemic on the development of tour operating in the Siberian and Far Eastern Federal Districts. A review of studies on the impact of COVID-19 on world and Russian (regional) tourism is presented. The author’s method of assessing the impact of the pandemic on the development of tour operators is proposed, which includes the analysis of the change in the volume and share of tour operators of regions in formation of revenues, the analysis of the change in the structure of distribution of market shares of tour operators of the regions and identification of changes in the level of monopolization of the market of tour operator services. The information base of the research included data on the revenue of 675 organizations listed in the Unified Federal Register of Tour Operators of Russia. Spatial shifts in the tourism market in the federal E. V. Konyshev (✉) Perm State National Research University, Perm, Russia A. K. Lutoshkina Vyatka State University, Kirov, Russia

districts under the influence of restrictive measures are registered. Keywords

Tour operating · COVID-19 · Economic consequences · Method · Herfindahl-Hirschman index · Concentration of the tourist market · Siberian Federal District · Far eastern Federal District

JEL Codes

O18 · R11 · Z3 · Z32

1

Introduction

In 2020, the development of tourism around the world was significantly affected by the epidemiological situation, namely the COVID-19 pandemic. In 2020, there was a long period when restrictions on the movement of the population and visiting tourist places were introduced. A considerable number of tour operators in different regions of the Russian Federation experienced significant financial problems, which still affect their activities. Economic consequences of the impact of the COVID-19 pandemic have regional characteristics and can be manifested in the deterioration of quantitative and qualitative characteristics of the tour operating market. The regions that specialize in domestic nature-oriented tourism significantly strengthened their market position. The level of monopolization increased in 12 regions out of 21 of the Siberian and Far Eastern Federal Districts. The concentration of the market of tour operator services increased n 60% of regions; in some regions, the leaders changed. The research results show the dependence of the manifestation of the pandemic factor on the level of

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_18

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monopolization of the market of tour operator services in the regions. These results can be used to adjust policy and strategic documents related to the development of tourism in the Siberian and Far Eastern Federal Districts.

2

Materials and Methods

Features of the development of tourist potential in the territory, taking into account the specifics of all kinds of resources and the needs of society in their work, are considered by such scientists as Kugan (2020), Savelyeva and Sozinova (2022), Fedorova et al. (2020), Kireeva et al. (2020), Morozov and Morozova (2021). The COVID-19 pandemic forced a rethinking of the importance of regional tourism development factors and intensified discussions about mechanisms and principles of its sustainable development. The development of territories during the COVID-19 period was considered by Aldao et al. (2021), Egorov and Romanova (2020), Henseler et al. (2022), Howarth et al. (2020), César Dachary et al. (2020), Kolesnikova (2020), Milner et al. (2021), Rodríguez-Antón Streimikiene and and Alonso-Almeida (2020), Korneeva (2020). The development of the tourist sector in the SFD with the presence of unique natural resources and complexes, as one of the most important regional growth points and one of the largest territories of the Russian Federation, was considered by Pecheritsa et al. (2018), Ilyina and Vishneva (2020), Anokhin and Kropinova (2020), Solominskaya (2020). The territory of the FEFD is the largest region in the territory of Russia. One of the most promising areas for the development of tourism in this territory is a cruise (oceanic) tourism, considered by Dolgaleva and Shumakova (2020), Lekhtyanskaya and Rimskaya (2019), Gomilevskaya and Ivanova (2019), Dyachenko and Dyachenko (2020). The operational-territorial units of the research are the SFD and FEFD within the boundaries of the beginning of 2022. The assessment subjects are tour operator organizations included in the Unified Federal Register of Tour Operators of Russia. The information base of the research included data on revenues of 675 tour operators from 2015 to 2020 (inclusive). In the regions of the FEFD, the performance indicators of 320 tour operators were analyzed. In the regions of the Siberian Federal District, the research base consisted of 320 organizations. Thus, the overall database included performance indicators of 88.1% and 87.7% of the tour operator market of the FEFD and SFD, respectively. The database does not include tour operators with zero revenue figures and whose form of ownership is “State Autonomous Institution.” The research methodology was partially tested on the example of the Arctic regions of Russia, considered in the

work of Konyshev and Lutoshkina (2021). The methodological basis of this research was the calculations for assessing the state of the market for tour operator services in the regions: 1. Conduct a comparative analysis of the change in the share of revenue of tour operators in the regions of the SFD and the FEFD in 2015–2020. 2. The Herfindahl—Hirschman Index (HHI) was used to calculate the change in the level of monopolization. This index is defined as the sum of the squares of the percentage of market shares occupied by each of its participants (1). n

HHR = i=1

S2i ,

ð1Þ

where: Si—the share in the tour operator revenue 3. The analysis of the distribution structure of market shares (CRn) of tour operators in the Arctic regions was carried out using the concentration index of the tourist market of the three tour operators with the largest revenue (2). n

CRn =

Si ,

ð2Þ

i=1

where: Si—the share in the tour operator’s revenue.

3

Results

It is possible to assess economic losses caused by COVID-19 to participants in the tourism market by comparing data on the revenue of tour operators received in the “pre-COVID” period in 2020. The calculations considered the amount of revenue received by tour operators in the regions of the SFD and the FEFD, included in the Unified Federal Register of Tour Operators of Russia, most of which work in the field of domestic and inbound tourism. In total, the authors analyzed the activities of 675 organizations included in the Unified Federal Register of Tour Operators of Russia, except those whose revenue indicators are equal to zero and those belonging to the state administration. As of March 2020, the most significant number of tour operators worked in the Kamchatka Territory in the FEFD (127 organizations) and the Irkutsk Region in the SFD (107 organizations). In general, there was a sharp decline in the total revenue of tour operators in the FEFD in 2020. This indicator did not change much for tour operators in the SFD compared to 2019.

The Economic Impact of COVID-19 on the Development of Tour Operating in the Siberian. . .

103

Table 1 Share of tour operators of regions in the formation of revenue of the regions of the FEFD and the SFD, %

Regions The Kamchatka territory The Primorye territory The Khabarovsk territory The Sakhalin region The republic of Buryatia The trans-Baikal territory The Amur region The republic of Sakha (Yakutia) The Jewish autonomous region The Magadan region The Chukotka autonomous region The Kemerovo region (Kuzbas) The Irkutsk region The Novosibirsk region The Altay territory The republic of Altay The Omsk region The Krasnoyarsk territory The Tomsk region The republic of Khakassia The republic of Tuva

Share of regions in revenue in 2015 16.5

Share of regions in revenue in 2016 23.8

Share of regions in revenue in 2017 23.8

Share of regions in revenue in 2018 16.4

Share of regions in revenue in 2019 34.8

Share of regions in revenue in 2020 41.7

27.1

25.2

26.7

15.4

27.5

19.3

-8.2

28.1

24.2

22.8

54.3

15.8

14.7

-1.1

5.4

5.3

5.3

2.4

5.1

9.1

+4.1

3.6

3.2

4.4

2.7

4.0

5.3

+1.3

5.2

5.7

7.0

3.5

5.3

3.2

-2.1

11.1 2.2

9.8 2.2

7.0 2.4

3.2 1.7

4.5 2.0

3.1 3.0

-1.3 +1.0

0.3

0.4

0.3

0.2

0.3

0.2

-0.1

0.6

0.2

0.2

0.2

0.2

0.2

-0.1

0.0

0.0

0.0

0.1

0.4

0.0

-0.4

4.7

4.0

4.7

5.8

11.9

37.4

+25.5

42.9

44.7

48.7

48.6

46.8

33.5

-13.3

32.8

29.6

28.8

27.1

22.6

12.7

-9.9

2.9

3.0

2.7

3.0

3.7

4.8

+1.1

2.6

4.8

3.3

3.1

3.2

4.3

+1.1

7.9 3.6

7.1 4.6

5.8 4.3

5.4 5.0

4.1 5.0

2.6 2.3

-1.5 -2.7

2.1

1.9

1.4

1.7

2.5

2.0

-0.5

0.3

0.3

0.3

0.2

0.2

0.4

+0.2

0.1

0.0

0.0

0.1

0.1

0.1

0.0

Change in the share of the region in revenue 2020/2019 +6.9

Source: Compiled by the authors based on the data on the portal Audit-it.ru (Magazine “Rest in Russia.”, 2020)

Differences in the consequences of COVID-19 can also be seen in the change in the share of tour operators in the formation of revenue and at the level of the regions of the FEFD and the SFD (Table 1). A sharp decline in revenue of tour operator activities in the Primorye Territory led to a significant weakening of the region’s position, mainly due to a sharp reduction in the tourist flow from China. The largest positive changes in the share in revenue are observed in the Kamchatka Territory. The year of 2020 saw

an increase in demand for active tours and cruises. For example, an expeditionary cruise to the Far East was carried out. Additionally, the All-Russian Forum “Masters of Hospitality” was held in this territory in 2020, which increased the attention of the professional community to the region. A sharp decline in revenue from tour operator activities in the Irkutsk Region in 2020 is associated with the closure of borders and zero tourist flow from China. Simultaneously, the share of the Kemerovo Region significantly increased due

104

to peculiarities of tourism specialization. The 2020 ski season was largely unaffected by the restrictions because the lockdown occurred in spring and early summer. Additionally, industrial tourism is actively developing in this region, stimulating the tourist flow for business purposes. The crisis of 2020 contributed to a change in the structure and parameters of the tourism market in the SFD and the FEFD. The Herfindahl-Hirschman index was used to calculate the change in the level of monopolization of the tourist market. As a result, three groups of regions were identified, depending on the obtained indices (Table 2). The first group is formed by markets with a high level of monopolization (concentration) (monopolistic markets). It included the regions with the Herfindahl-Hirschman index in the range of 1800 < HHI < 10,000. The second group included the regions with a strong level of monopolization (concentration) (oligopolistic markets)—1000 < HHI < 1800. The third group is made up of the regions with a low level of monopolization (concentrations) (competitive markets)— HHI < 1000. In general, the territory of the FEFD is characterized by a high level of monopolization of the tour operator services market. In 2019, highly competitive markets functioned in three regions; in 2020, only one left. In 2020, the Jewish Autonomous Region and the Magadan Region had the highest values. The Chukotka Autonomous Region is not considered because there was an absolute level of monopolization due to the underdevelopment of the tourist market. In general, at the end of 2020, the territory of the FEFD saw a significant increase in the level of monopolization of the tour operator services market in five regions. The Amur Region is the leader in absolute growth of the value of the HerfindahlHirschman index. The assessment of the level of monopolization of the market of tour operator services in the regions of the SFD revealed problems and trends similar to the FEFD—the predominance of the monopoly or oligopolistic form of market development and worsening of the situation in 2020. The overall level of monopolization increased in seven regions. According to the results of 2020, in the SFD, the Republic of Tuva, the Republic of Khakassia, the Omsk Region, the

E. V. Konyshev and A. K. Lutoshkina

Tomsk Region, and the Kemerovo Region (Kuzbass) had a high level of monopolization. The Republic of Altay, the Irkutsk Region, and the Novosibirsk Region were characterized by a strong level of monopolization, with signs of an oligopolistic market in 2020. The Altay Territory and the Krasnoyarsk Territory had a low level of monopolization and an established highly competitive market.

4

Conclusion

Due to the unique natural and geographical features of the territories of the SFD and the FEFD, a special individual approach to the development of these territories is required. This approach should consider new factors in the development of tourism. The tourism sector directly depends on the ability of the population to consume tourism services and the ability of a particular region to create a competitive product. The COVID-19 pandemic showed that the successful development of tourism in the territories of the Russian Federation directly depends on the capabilities of national resorts, the number of accommodation facilities, and the uniqueness of tourist routes. In our opinion, the potential of the regions of the SFD and the FEFD allows creating tourist products that are in demand in the new conditions and compete with traditional tourist centers. A necessary condition is a highly competitive tourist market in the region. Thus, the COVID-19 pandemic led to serious changes in the field of tour operating in the Russian Federation, including in the regions of the FEFD and the SFD. Even though many regions have begun to lift the current restrictions, the negative change in the structure of the tour operator services market may persist for a long time. The opening of popular foreign destinations can also increase the negative trends. In general, the regions of the FEFD and the SFD need to consider the existing features of tour operator markets and use all kinds of conditions to develop tour operating, adjust documents of territorial planning and management of the tourism sector, and participate in state programs and the national project “Tourism and hospitality industry.”

The Economic Impact of COVID-19 on the Development of Tour Operating in the Siberian. . . Table 2 The level of monopolization of the market of tour operator services in the regions of the FEFD and the SFD Regions The republic of Buryatia The republic of Sakha (Yakutia) The trans-Baikal territory The Kamchatka territory The Primorye territory The Khabarovsk territory The Amur region The Magadan region The Sakhalin region The Jewish autonomous region The Chukotka autonomous region The republic of Altay The republic of Tuva The republic of Khakassia The Altay territory The Krasnoyarsk territory The Irkutsk region The Kemerovo region (Kuzbas) The Novosibirsk region The Omsk region The Tomsk region

Year 2019 2020 2019

HHI 1167 1084 1642

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

2193 3281 3117 766 508 792 1617 906 1403 1712 3332 5226 5093 1480 1346 7959

2020 2019

8323 10,000

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

10,000 1197 1146 7684 5410 2987 4181 582 611 696 814 992 1538 4529

2020 2019 2020 2019 2020 2019 2020

7411 1904 1339 4274 4566 1483 2598

Change in the level of monopolization in 2020 -83 +551

Level of monopolization of the tour operator services market Strong Strong Strong

+363

High High High Low Low Low Strong Low Strong Strong High High High Strong Strong High

0

High High

-165 -258 +826 +497 +1620 -133 -135

-51 -2274 +1194 +29 +117 +546 +2882

-565 +292 +1116

High Strong Strong High High High High Low Low Low Low Low Strong High High High Strong High High Strong High

Source: Compiled by the authors based on the data on the portal Audit-it.ru (Magazine “Rest in Russia.”, 2020)

105

106

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E. V. Konyshev and A. K. Lutoshkina regions. Moscow Economic Journal, 9, 544–558. https://doi.org/ 10.24411/2413-046X-2020-10657 Kolesnikova, M. L. (2020). EU maritime economy and COVID-19. Modern Europe, 4, 102–111. https://doi.org/10.15211/ soveurope42020102111 Konyshev, E. V., & Lutoshkina, A. K. (2021). Economic consequences of the COVID-19 impact on the tourism development in arctic regions of Russia. Arctic: Ecology and Economy, 11(4), 504–518. https://doi.org/10.25283/2223-4594-2021-4-504-518 Kugan, S. F. (2020). Spatial development of territories in the context of economic development of the region. Corporate Governance and Innovative Economic Development of the North: Bulletin of Research Center of Corporate Law, Management and Venture Investment of Syktyvkar State University, 1, 95–100. https://doi. org/10.34130/2070-4992-2020-1-95-100 Lekhtyanskaya, L. V., & Rimskaya, T. G. (2019). Tourism – One of priority directions of the economic development of the FAR EAST. Karelian Scientific Journal, 2(27), 126–131. https://doi.org/10. 26140/knz4-2019-0802-0033 Magazine “Rest in Russia.” (2020, December 25). National tourist rating 2020. Accessed April 25, 2022, from https://rustur.ru/ nacionalnyj-turisticheskij-rejting-2020. Milner, J., Davies, M., Haines, A., Huxley, R., Michie, S., Robertson, L., et al. (2021). Emerging from COVID-19: Lessons for action on climate change and health in cities. Journal of Urban Health, 98, 433–437. https://doi.org/10.1007/s11524-020-00501-2 Morozov, M. A., & Morozova, N. S. (2021). Regional features of development of tourist infrastructure and their impact on tourism. The Region, 29(3), 588–610. https://doi.org/10.15507/2413-1407. 116.029.202103.588-610 Pecheritsa, E. V., Kuchumov, A. V., & Testina, Y. S. (2018). Some of determinants of the sustainability of tourism in Siberian Federal District. IOP Conference Series: Earth and Environmental Science, 204, 012036. https://doi.org/10.1088/1755-1315/204/1/012036 Rodríguez-Antón, J. M., & Alonso-Almeida, M. d. M. (2020). COVID19 impacts and recovery strategies: The case of the hospitality industry in Spain. Sustainability, 12(20), 8599. https://doi.org/10. 3390/su12208599 Savelyeva, N. K., & Sozinova, A. A. (2022). State regulation of prices of goods as a factor of global competitiveness and development of digital economy in EAEU member states. Bulletin of north Ossetian state university named after K. L. Khetagurov, 1, 170–181. Solominskaya, O. O. (2020). Analysis of balanced development of the region on the example of eastern Siberia. Moscow Economic Journal, 8, 519–533. https://doi.org/10.24411/2413-046X-2020-10576 Streimikiene, D., & Korneeva, E. (2020). Economic impacts of innovations in tourism marketing. Terra Economicus, 18(3), 182–193. https://doi.org/10.18522/2073-6606-2020-18-3-182-193

Methodological Approaches to Risk Assessment of the Implementation of State Programs and their State Financing in the Field of Healthcare in the Regions of Russia Nadezhda I. Yashina , Sergey N. Yashin , Ekaterina S. Malysheva Oksana I. Kashina , and Nataliya N. Pronchatova-Rubtsova

Abstract

In the context of the permanent restructuring of the financial system of the state, the entire healthcare sector is also being transformed, including its financing. And in many respects, the development opportunities of the healthcare field depend on investments in it. The well-being of the country is determined by the accumulation of human capital, and its main value is the health of the people. Purpose: Development of methodological tools for assessing the risks of implementing state programs and their public financing in the healthcare field as the most significant factor in the human capital development. Design/methodology/approach: Methods of economic, system analysis and mathematical statistics formed the investigation methodological base. The methodological tools were tested on the official data of the Federal State Statistics Service and the Ministry of Finance of the Russian Federation for 2019–2021. Findings: The results of the study determine approaches to assessing the risks of implementing state programs and their public financing in the healthcare field. Originality/value: The ranking of the regions of the Russian Federation makes it possible to classify them into risk categories: from an extremely high risk level to a low risk level. Keywords

State programs · Evaluation of efficiency · Rating of regions of the Russian Federation · Consolidated standardized coefficient · Target indicator · Value-oriented budget strategy N. I. Yashina (✉) · S. N. Yashin · O. I. Kashina · N. N. Pronchatova-Rubtsova Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia E. S. Malysheva Privolzhsky Research Medical University, Nizhny Novgorod, Russia

,

JEL Code

H7 · H21 · H61 · H51

1

Introduction

The basis of the methodological tools for diagnosing the effectiveness of the implementation of social state programs is the method of standardizing the indicators included in the system, reflecting the groups of resource financial support and target results, characterizing the potential for providing a value-oriented financial policy of the state, in which the achievement of the goal is assessed from the standpoint of universal human values, such as truth., goodness, socially and personally significant values—life. Attention to the problem of state financing of healthcare has always been paid by scientists and practitioners in many countries of the world (Alfonso & Miguel, 2005; Anderson & Poullier, 1999; Arrow, 1963; Berger & Messer, 2002; Blomqvist, 2011; Bokhari et al., 2007; Getzen, 2000; Kulkarni, 2016; Tae & Shannon, 2013), and in the light of recent events—the COVID-19 pandemic, it is obvious that the healthcare system has become one of the most vulnerable systems that requires a special approach in terms of financing and public policy development. It has been noted that despite the growth in government funding for the healthcare sector, which is especially noticeable during periods of crisis, it belongs to inefficient expenditure items (Anton & Onofrei, 2012; Chakraborty et al., 2013). Scientists (Anton & Onofrei, 2012; Novignon et al., 2012) revealed that different levels of GDP and healthcare financing explain differences in population health, which is consistent with the results of other researchers (Bhalotra, 2007; Rajkumar & Swaroop, 2008). Methodological principles on which a number of studies were based (Anton & Onofrei, 2012; Bhalotra, 2007; Rajkumar & Swaroop, 2008) are associated with the use of regression analysis of structured

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_19

107

108

N. I. Yashina et al.

statistical data and econometric methods (Gerdtham & Jonsson, 2000). At the same time, a number of studies (Alfonso & Miguel, 2005; Berger & Messer, 2002; Bokhari et al., 2007; Kulkarni, 2016; Tae & Shannon, 2013) refute the existence of a direct relationship between government spending on healthcare and population health indicators and demonstrate contradictory results. Scientists (Berger & Messer, 2002) also showed that the increase in health insurance coverage in twenty OECD countries has a greater effect on reducing mortality than the level of public spending on healthcare. The strengthening of the role of additional private health insurance as one of the guarantees for improving the health indicators of the population was also emphasized in (Rebba, 2014). Earlier, in the works of the authors of this article (Yashin et al., 2018; Yashina et al., 2017), a system was proposed for a comprehensive assessment of the effectiveness of financing and managing the healthcare system, according to the peculiarities of the government’s financial policy for the human capital development and the socio-economic situation of the country. In the context of crisis phenomena, the key in the field of budget policy is the transformation of the budget mechanism into an effective tool for macroeconomic stabilization and the use of all reserves of budget expenditures to finance the development of the economy and human capital (Bogolib, 2015).

2

Methodology

The first stage includes the analysis of data from the Ministry of Finance of the Russian Federation, the Federal State Statistics Service in order to determine comprehensive risk

criteria for the implementation of state programs in the field of education, healthcare and social protection of the population. Information on indicators should allow determining for each region the meaning of the criterion «probability of financing risk» (criterion «probability of timely and full public financing of state programs in the field of healthcare»), the meaning of the criterion «achievability of target indicators of government programs» (criterion «achievability»). Risk is understood as the degree of timely and full financing of state social programs, as well as the degree of achievability of target indicators. When determining the meaning of the criterion «probability of the risk of financial security», a system of budget indicators is used: indicators of independence, tax revenues from the economy, entrepreneurship, financial solvency, management expenses, interest expenses, socially oriented policy, production expenses, security of financing expenses for the socio-cultural sphere with their own income, security of financing expenses for the socio-cultural sphere with income taxes that form a regional product, etc. When determining the meaning of the criterion «achievability of target indicators of state programs» (criterion «achievability»), a system of coefficients is used that characterizes the effectiveness of the implementation of state programs, indicated in Table 1. The system of indicators that characterize the risks of implementing state programs and the potential for financing healthcare in the regions of Russia is built taking into account the structure of revenues, budget expenditures, target indicators-results of the implementation of state programs in the field of healthcare. The interpretation of indicators is given taking into account the interest of the subjects of analysis. The analysis is important for public authorities at

Table 1 The system of indicators characterizing the achievability of target indicators of state programs (fragment) Target indicators Total fertility rates Crude death rates Mortality of the working-age population Infant mortality rates Number of hospital beds per 10,000 population Population per hospital bed Capacity of outpatient clinics per 10,000 people The number of doctors of all specialties per 10,000 people Population per doctor Population per employee of paramedical personnel Number of nurses per 10,000 people Per 1000 women aged 15–49 Termination of pregnancy (abortion) Per 100 births termination of pregnancy (abortions) Incidence per 1000 population The ratio of ambulances and medical staff GRP per capita

Interpretation of indicators taking into account the interest of the subjects of analysis Maximization Minimization Minimization Minimization Maximization Minimization Maximization Maximization Minimization Minimization Maximization Minimization Minimization я Minimization Maximization Maximization

Source: Developed and compiled by the authors based on data from the Federal State Statistics Service of the Russian Federation

Methodological Approaches to Risk Assessment of the Implementation of State Programs. . . Criterion «risk of financing healthcare» (F)

Fig. 1 Combination matrix of the criterion «health financing risk» and the criterion «achievability of healthcare target criteria». Source: Calculated and built by the authors

Low risk F3 Low risk F2 Low risk F1

109

F 3 – THC 1 IV category F 2 – THC 1 V category F 1 – THC 1 VI category

F 3 – THC 2 III category F 2 – THC 2 IV category F 1 – THC 2 V category

F 1 - THC 3 I category F 2 - THC 3 II category F 1 - THC 3 III category

Low risk THC 1

Medium risk THC 2

High Risk THC 3

Achievability Criteria for Health Targets (THC)

all levels, public-private partnership structures, and the population. Some indicators are debatable, caused by a similar controversial principle of providing «medical care» or «medical service». Based on the goal-setting of the provision of «medical care» or «medical services», both funding and criteria-results will strive for the maximum or minimum value. The second stage is the standardization of indicators. Standardized indicators vary from 0 to 1 based on their calculation by formulas (1) and (2). The first group (maximization of coefficients): SC
ij =

SCi max - SCij : SCi max - SCi min

ð1Þ

The second group (minimization of coefficients):

SC
ij =

SCij - SCi min , SCi max - SCi min

ð2Þ

where SCij—actual value and SC
ij —standardized value of the i-th coefficient in the j-th region, SCi max—the largest and SCi min—the lowest calculated value of the i-th coefficient among the regions of the country. At the third stage, the summary standardized coefficient is determined (SSCj) according to formula (3). n

SSCj = i=1

SC
ij

ð3Þ

The region with the lowest value of the composite standardized coefficient has the best result SSCj. As a result of the applied standardization methods, consolidated standardized risk indicators are determined, which make it possible to calculate a consolidated standardized coefficient showing the risk of implementing state programs (СSSCTHC), and a consolidated standardized coefficient characterizing the risk of healthcare financing (SSCf) in the regions of Russia. When determining both the meaning of the criterion «risk of financing healthcare» (F), the meaning of the criterion «risk of implementing state programs—achievability of

target health criteria» (THC), a rating scale is used—«low score—level 1», «medium score—level 2» or «high score—3 level». Based on risk analysis (Fig. 1) each region is assigned a risk category: • extremely high risk—I category, the meaning of the criteria «achievability of target healthcare criteria» and «risk of healthcare financing» are determined by the rating scale as «high»; • high risk—category II, the meaning of the criterion «achievability of target healthcare criteria» is determined by the scale of assessments as «high», and the criterion «risk of financing healthcare»—as «medium»; • significant risk—III category, the meaning of the criterion «achievability of target healthcare criteria» is determined on the scale of assessments as «high», the meaning of the criterion «risk of financing healthcare»—as «low» or the meaning of the criterion «achievability of target healthcare criteria»—as «medium», the meaning of the criterion «health financing risk»—as «high»; • medium risk—category IV, the meaning of the criteria «reachability of target healthcare criteria» and «risk of healthcare financing» are determined on a scale of assessments as «medium» or the meaning of the criterion «reachability of target criteria for healthcare»—as «low», and «risk of healthcare financing»—as «high»; • Moderate risk—Category V, the meaning of the criterion «achievability of target healthcare criteria» is determined on the scale of assessments as «medium», the meaning of the criterion «risk of financing healthcare»—as «low» or the meaning of the criterion «achievability of target healthcare criteria»—as «low», the meaning of the criterion «health financing risk»—as «average»; • low risk—category VI, the meaning of the criteria «achievability of target healthcare criteria» and «health financing risk» are determined by the rating scale as «low».

If the objects of control have the same values of the criterion «risk of financing healthcare» and the criterion «risk of implementing state programs», the priority for

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understanding the risk of implementing state programs and financing healthcare in the regions of Russia is the region where the population is larger.

3

Results

Empirical results of the assessment of financial resilience to budgetary stresses in the regions are presented in Table 2. Based on the calculations, the regions were identified by risk categories (I-VI): • Extremely high risk: Republic of Dagestan. Altai Republic; • High risk: Astrakhan region, Chelyabinsk region, Irkutsk region, Arkhangelsk region; • Significant risk: Lipetsk Region, Republic of Buryatia, Zabaikalsky Krai, Karachay-Cherkess Republic; • Medium risk: Smolensk region, Kirov region, Republic of Tatarstan, Sverdlovsk region, Nizhny Novgorod region; • Moderate risk: Moscow region, Tyumen region, St. Petersburg, Leningrad region; • Low risk: Moscow, Sakhalin region. For example, the Nizhny Novgorod region, according to the presented methodology, falls into the fourth category of risk or medium risk. The Nizhny Novgorod region ranks 53rd and 58th, taking into account the «Covid» indicators in the ranking. Based on statistical data on the healthcare department, it can be concluded that the Nizhny Novgorod region has indicators significantly lower than the national average in terms of overall birth rates, mortality, the number of doctors, nurses, population per doctor, morbidity, such as neoplasms, respiratory diseases, etc. If the objects of control have the same meanings of the criterion «risk of financing healthcare» and the criterion «risk of implementing state programs», the priority for understanding the risk of implementing state programs and financing healthcare in the regions of Russia is the region where the

population is larger. Let us highlight the risk factors for the implementation of state programs and their state financing in the healthcare sector in the regions of the Russian Federation. • Public spending on health is reduced (in real prices, in % of GDP), priorities are being chosen to improve the health of the population, incl. Children, adolescents, a decrease in primary morbidity, a decrease in the mortality of Russian men; • The low efficiency of healthcare in the regions is a shortage of doctors and nurses. • Unsatisfactory quality of medical care, lack of funding and consistency in the training and advanced training of doctors; • Increasing negative dynamics of «effective managers» in healthcare, lack of professionalism in management, based not only on knowledge in the field of management, economics and finance, but also on high moral ideals of a person. Positive development factors that testify to the potential of public financing include a low tax burden, growth in non-oil and gas revenues, a low level of public debt, and an increase in the national wealth fund.

4

Conclusion

In general, the use of the developed methodological tools makes it possible to evaluate the regions of Russia in terms of the effectiveness of the implementation of state programs, providing the population with medical care in order to preserve and grow human capital in Russia. The proposed methodology, based on a system of indicators that characterize the risks of implementing state programs and the potential for financing healthcare in the regions of Russia, makes it possible to implement a valueoriented budget strategy in order to financially ensure high standards of the quality of life of the population.

Methodological Approaches to Risk Assessment of the Implementation of State Programs. . .

111

Table 2 Risk categories based on the analysis of the combination of the criterion «risk of healthcare financing» and the criterion «risk of the implementation of government programs»

Regions The republic of Dagestan Altai Republic Bryansk region Chuvash Republic Astrakhan region Chelyabinsk region Irkutsk region Arhangelsk region Mari El Republic Kemerovo region— Kuzbass Vologda region Stavropol region Lipetsk region The republic of Buryatia Zabaykalsky Krai KarachayCherkess Republic KabardinoBalkarian Republic Chechen Republic Tambov region The republic of Mordovia Smolensk region Kirov region Republic of Tatarstan Sverdlovsk region Nizhny Novgorod region Voronezh region Khanty-Mansi autonomous Okrug—Yugra

Consolidated standardized coefficient characterizing the risk of healthcare financing 6990

Levels according to the criterion «health financing risk» 3F

Consolidated standardized coefficient showing the risk of implementing government programs 44,56

Levels according to the criterion «risk of implementing state programs» THC 3

Risk category 1

7182 6309

3F 2F

49,46 45,63

THC 3 THC 3

1 2

6189

2F

45,93

THC 3

2

5472

2F

48,51

THC 3

2

5421

2F

48,52

THC 3

2

5437 5869

2F 2F

48,74 48,84

THC 3 THC 3

2 2

6543

2F

51,27

THC 3

2

5632

2F

51,71

THC 3

2

5430

2F

52,64

THC 3

2

6099

2F

37,32

THC 2

3

5376 6533

2F 2F

37,47 37,48

THC 2 THC 2

3 3

6271

2F

37,66

THC 2

3

7045

3F

39,86

THC 2

3

7151

3F

26,67

THC 1

4

7170

3F

31,28

THC 1

4

6167

2F

37,11

THC 2

4

6531

2F

38,73

THC 2

4

5581

2F

40,42

THC 2

4

6234 5260

2F 2F

41,96 43,13

THC 2 THC 2

4 4

5035

2F

43,15

THC 2

4

5497

2F

44,03

THC 2

4

5331

2F

33,25

THC 1

5

3851

1F

37,77

THC 2

5

(continued)

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Table 2 (continued)

Regions Moscow region Tyumen region Saint Petersburg Leningrad region Moscow Sakhalin region

Consolidated standardized coefficient characterizing the risk of healthcare financing 4941

Levels according to the criterion «health financing risk» 1F

Consolidated standardized coefficient showing the risk of implementing government programs 38,65

Levels according to the criterion «risk of implementing state programs» THC 2

Risk category 5

4218

1F

38,95

THC 2

5

3944

1F

40,28

THC 2

5

4375

1F

43,64

THC 2

5

4062 4498

1F 1F

32,17 35,00

THC 1 THC 1

6 6

Source: Developed and compiled by the authors based on data from the Ministry of Finance of the Russian Federation (Ministry of Finance of the Russian Federation, 2022) and the Federal State Statistics Service of the Russian Federation (Federal State Statistics Service, 2022)

Acknowledgments The study was carried out within the framework of the Strategic Academic Leadership Program «Priority 2030» of the Ministry of Education and Science of the Russian Federation, project N-426-99-2022-2023 «Socio-economic models and technologies for the development of creative human capital in an innovative society».

References Alfonso, A., & Miguel, S. (2005). Non-parametric approaches to education and health efficiency in OECD countries. Journal of Applied Economics, VIII(2), 227–246. Anderson, G., & Poullier, J. (1999). Health spending, access, and outcomes: Trends in industrialized countries. Health Affairs, 18(3), 178–192. Anton, S., & Onofrei, M. (2012). Health care performance and health financing system in countries from central and Eastern Europe. Transylvanian Review of Administrative Sciences, 35(E/2012), 22–32. Arrow, K. (1963). Uncertainty and the welfare economics of medical care. The American Economic Review, 53(5), 941–973. Berger, M., & Messer, J. (2002). Public financing of health expenditures, insurance, and health outcomes. Applied Economics, 34(17), 2105–2114. Bhalotra, S. (2007). Spending to save? State health expenditure and infant mortality in India. Health Economics, 16(9), 911–928. Blomqvist, A. (2011). Public sector health care financing. In S. Glied & P. C. Smith (Eds.), Oxford handbook of health economics. Oxford University Press. Bogolib, T. (2015). Fiscal policy as an instrument of macroeconomic stability. Economic Annals-XXI, 3–4(1), 84–87. Bokhari, F., Gai, Y., & Gottret, P. (2007). Government health expenditures and health outcomes. Health Economics, 16, 257–273. Chakraborty, L., Singh, Y., & Jacob, J. (2013). Analyzing public expenditure benefit incidence in health care: Evidence from India. Working Paper, 748.

Federal State Statistics Service [Electronic resource]. Access mode: https://rosstat.gov.ru/regional_statistics/ (data accessed: 03.05.2022). Gerdtham, U., & Jonsson, B. (2000). International comparison of health expenditure: Theory, data and econometric analysis. Handbook of Health Economics, 1, 11–53. Getzen, T. (2000). Health care is an individual necessity and a National Luxury: Applying multilevel decision models to the analysis of health care expenditures. Health Economics, 19(2), 259–270. Kulkarni, L. (2016). Health inputs, health outcomes and public health expenditure: Evidence from the BRICS countries. International Journal of Applied Economics, 31(1), 72–84. Ministry of Finance of the Russian Federation [Electronic resource]. Access mode: https://www.minfin.ru/ru/ (data accessed: 03.05.2022). Novignon, J., Olakojo, S., & Nonvignon, J. (2012). The effects of public and private health care expenditure on health status in sub-Saharan Africa: New evidence from panel data analysis. Health Economics Review, 2(22), 1–18. Rajkumar, A., & Swaroop, V. (2008). Public spending and outcomes: Does governance matter? Journal of Development Economics, 86, 96–111. Rebba, V. (2014). The long-term sustainability of European health care systems. «Macro Fanno» Working Paper, vol. 191. Tae, K., & Shannon, R. (2013). Government health expenditure and public health outcomes: A comparative study among 17 countries and implications for US health care reform. American International Journal of Contemporary Research, 3(9), 8–13. Yashin, S. N., Yashina, N. I., Poyushcheva, E. V., Malysheva, E. S., Pronchatova-Rubtsova, N. N., & Kashina, O. I. (2018). Evaluating the effectiveness of public health financing based on financial and non-financial indicators in terms of the knowledge economy. European Research Studies Journal, 21, 112–123. Yashina N., Petrov S., Pronchatova-Rubtsova N., & Kashina O. (2017). Effectiveness of financing the public expenditures on health care. In: European financial systems 2017. In Proceedings of the 14th International Scientific Conference, Masaryk University, Brno. Part 2, pp. 466–473.

The Impact of COVID-19 on the Economies of Petroleum-Exporting Middle Eastern Countries Vladimir Z. Chaplyuk, Fakhraddin N. Akhmedov, Mhd Shaker Zeitoun, and Ahmad S. Al Humssi

Abstract

The paper investigates the impact of the COVID-19 pandemic on the petroleum-exporting countries in the Middle East region. This region mainly includes Saudi Arabia (KSA), Unites Arab Emirates (UAE), Bahrain, Qatar, Yemen, Oman, Jordan, Iraq, Syria, Lebanon, Turkey, and Egypt. This research quantifies the impact of the COVID-19 pandemic on each country in the Middle East separately. The research divides the countries of the Middle East into four main groups: countries with strong financial reserves, countries with medium financial reserves, countries with weak financial reserves, and countries with weak financial reserves and unstable situations. The research found that the economies of the Middle East countries differ in terms of the impact of the COVID-19 pandemic on each country, mainly due to the variation in the preventive measures taken in each country to reduce the impact of the pandemic. Keywords

Middle eastern countries · COVID 19 · Gross domestic product · Foreign trade · Foreign direct investment

JEL Codes

Q40 · Q41 · Q43 · F40 · E32 · E62

V. Z. Chaplyuk (✉) · F. N. Akhmedov · M. S. Zeitoun Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected] A. S. Al Humssi Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

1

Introduction

The Middle East (Near East) (Middle East, 2021) is a geographical region located at the junction of Europe, Asia, and Africa (Zulfqar, 2018). The Middle East region includes the territories of countries such as Lebanon, Syria, Jordan, Iraq, Iran, Turkey, Egypt, Yemen, Saudi Arabia, and Sudan. The eastern region is characterized by several economic, geographical, and political advantages. The Middle East is economically important because it contains large oil and natural gas reserves (O’Sullivan et al., 2011). The most important industries of the Middle Eastern countries include oil production and oil refining (IEA, 2020), agriculture, etc. The characteristics of the sectoral structure of the economy of the Middle Eastern countries significantly differ from each other. Some countries largely depend on exporting products from the oil and oil refining industry (e.g., Saudi Arabia, Iraq, etc.). Others have a fairly diversified economic base (e.g., Egypt, Syria, and Turkey). The Middle East region is geographically located within the three continents of Europe, Africa, and Asia. Therefore, the region is the only land corridor connecting these continents (Easley & Cox, 2007). Politically, the Middle East region is important to the military aspect of Western countries. Thus, the Middle East is seen as a geopolitical region (Aras & Kardaş, 2021; Kausch, 2015; Rahman, 2008). The Middle East is a region affected by chronic ongoing conflicts and serious inequalities in health and welfare provision (Fawcett, 2021). The Middle East is considered unstable, for example, Iraq, Syria, Lebanon, Palestine, and Yemen. Most of these countries currently experience armed conflicts. The Middle East region has suffered economic challenges, including low GDP growth. The region is also characterized by limited economic opportunities and high unemployment levels (O’Sullivan et al., 2011), as well as weak foreign direct investment inflows and rising levels of debt (Hoogeveen & Lopez-Acevedo, 2021). Furthermore, some Middle Eastern

Financial University under the Government of the Russian Federation, Moscow, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_20

113

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countries have middle-and low-income (Dabrowski & Domínguez-Jiménez, 2021). Nowadays, the world experiences the consequences of the spread of the COVID-19 pandemic, which affected various economic sectors, led to a great shock to the global economy (Chaplyuk et al., 2021; Petrovskaya et al., 2022), and a sharp shift in global growth rates to negative rates in 2020 and 2021. The Middle East was affected by the COVID-19 pandemic (Alabdulkarim et al., 2021; Hinojosa & Acosta, 2021; Sawaya et al., 2020; SeyyedHosseini & BasirianJahromi, 2021). Strict preventive measures have affected the economies of the Middle East countries. Factories stopped working, transportation stopped, the unemployment rate increased, and poverty increased dramatically, especially in war-torn countries in the East, such as Syria, Iraq, Yemen, etc.

2

Eastern oil-exporting countries (MEOE countries) with large oil reserves under the COVID-19 pandemic. In 2020, the WHO declared COVID-19 a global pandemic (World Health Organization (WHO), 2020) because it spread in the city of Wuhan and from there to other countries, including the Middle East countries (Worldometer, 2022). The COVID-19 pandemic has impacted all aspects of life, whether economic or social, in all countries, including MEOE countries. One of the most important economic indicators that have been negatively affected by the spread of the COVID-19 pandemic is economic growth. In 2020, there was a downturn in the economic growth of the Middle East region due to the impact of the global pandemic (Arab Monetary Fund, 2022; The Arab Investment & Export Credit Guarantee Corporation, 2021). However, most of these countries achieved positive growth in 2021. To rank the countries of the Middle East according to the rate of economic development, the authors use the following indicator:

Methodology

Rg =

The spread of the COVID-19 pandemic has negatively affected the economies of countries, whether they are developing or developed. The oil-exporting countries of the Middle East were also affected. In this research, the authors seek to address the impact of COVID-19 on the economic indicators of the Middle East oil-exporting countries: Saudi Arabia, Qatar, UAE, Iraq, Oman, and Kuwait. During the research, the authors conducted economic analysis and forecasting to determine the economic losses of the oil-exporting Middle Eastern countries under COVID-19. The research uses data issued by international and regional organizations such as the World Bank Group, the International Monetary Fund, the Arab Monetary Fund, and others.

AARgrOrF ¼

k

Rg1 Rgmax y1

2

×

Rg2 Rgmax y2

Rgn Rgmax

2

ð1Þ

where: Rg—the relative weight of the economic growth of the selected country; Rgn—economic growth of a chosen country; Rgmax—highest economic growth of a country in the sample. Considering the time factor (n) and the number of timeseries (k) in the test, the authors get the following mathematical equation:

2

×

Rg3 Rgmax y3

2

............

Rgn Rgmax yn

2

ð2Þ

where:

3

Experimental Analysis and Results

Although the Middle East region contains large oil reserves, the Middle East countries differ in terms of oil reserves (World Population Review, 2022). There are countries with huge reserves (KSA, Iraq, Kuwait, UAE, and Qatar) and countries with small reserves (Oman, Egypt, Yemen, Syria). Therefore, in this research, the authors focus on the Middle

AARgrOrF—the average relative weight of the economic growth of the selected country in the studied period. Figure 1 shows AARgrOrF for Iraq, KSA, Oman, UAE, Qatar, and Kuwait. Analyzing the data from Fig. 1, the authors note that all MEOE countries achieved negative growth as a result of the impact of the COVID-19 pandemic.

The Impact of COVID-19 on the Economies of Petroleum-Exporting Middle Eastern Countries

115

Fig. 2 The average relative weight of the GDP for MEOE countries in the period from 2017 to 2022. Source: Compiled by the author Fig. 1 The average relative weight of the economic growth for MEOE countries from 2017 to 2022. Source: Compiled and calculated by the authors based on (Arab Monetary Fund, 2022; The Arab Investment & Export Credit Guarantee Corporation, 2021)

In 2021, these countries achieved positive growth, which can be explained by the fact that all MEOE countries began the economic recovery phase and achieved positive growth. Moreover, GDP is a measure of the country’s economic capacity in a specific period. Saudi Arabia ranks first in terms of GDP, UAE ranks second, and Oman occupies the last place (World Bank, 2022c). To classify these countries according to economic strength, the authors use the following model: RGDP =

GDPn RGDPmax

2

ð3Þ

where: RGDP—the relative weight of the GDP of the selected country; Rgn—GDP of a chosen country; Rgmax—the highest GDP of a country in the sample.

where: AARGDPOrF—the average relative weight of the GDP of the selected country in the studied period. Using the previous Eq. (4), the authors get the following results (Fig. 2). To determine the size of the losses to the GDP in the period of the COVID-19 pandemic, the authors made a forecast, considering the time factor while holding other variables constant. The result is shown in Table 1: According to Table 1, the relationship between the GDP and time factor for the MEOE countries is a strong direct linear relationship. Based on this relationship, it is possible to predict the size of the GDP of these countries (assuming there is no COVID-19), as shown in the following Table 2. Data from Table 2 shows that the selected countries faced losses in 2020 as a result of the spread of the COVID-19 pandemic. The losses of the KSA amounted to $89.90 billion, Kuwait—$33.62 billion, and the UAE—$12.76 billion. Considering the volume of the GDP of each country separately, the authors can calculate the relative weight of the losses to the volume of the GDP (Eqs. 5 and 6).

Considering the time factor (n) and the number of time series (k) in the test, we get the following mathematical equation:

AARGDPOrF ¼

k

GDP1 GDPmax y1

2

×

GDP2 GDPmax y2

2

×

GDP3 GDPmax y3

2

...

GDPn GDPmax yn

2

ð4Þ

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V. Z. Chaplyuk et al.

Table 1 Models output

AvlosGDP

Country UAE

R 0.91

R2 0.83

F 203.3299

Iraq

0.72

0.53

Kuwait

0.85

0.73

116.7533

0.00

Oman

0.89

0.79

163.4946

0.00

Qatar

0.84

0.70

100.8518

0.00

KSA

0.88

0.77

141.6099

0.00

46.46514

P value 0.00 0.00

Model y = 9.6416x71.888 y = 4.1071x16.384 y = 3.4451x18.901 y = 2.0834x17.214 y = 4.4184x48.286 y = 16.29x-82.821

Source: Compiled and calculated by the authors based on (Arab Monetary Fund, 2022; The Arab Investment & Export Credit Guarantee Corporation, 2021)

LosGDP% =

LosGDP × 100% GDP

ð5Þ

To measure the average rate of losses for these countries, the authors use the following model:

=

n

LosGDP1 LosGDP2 LosGDP3 LosGDPn × × ......: GDP1 GDP2 GDP3 GDPn

ð6Þ If we use the previous model, we get the average rate of losses for MEOE countries: AvlosGDP = 6:746967895 Using the previous two models, we get the losses caused by COVID-19 (% of GDP): Kuwait—24.09%, the KSA— 11.33%, Qatar—6.81%, UAE—3.43%, and Iraq—1.77%. The IMF (IMF, 2022) expects economic growth higher than the tabular results in 2021–2027, as in Table 2. This can be explained by the following reasons: • A rise in global crude oil prices and the prices of energy sources as a result of the Ukrainian crisis; • Rapid growth in the economy, especially in the years following the shock caused by the COVID-19 pandemic, because countries seek to compensate for the economic losses resulting from the epidemic.

Table 2 GDP Forecasting for MEOE countries in the period from 2020 to 2027, bln. USD Forecasting GDP (Assuming there is no impact of COVID-19)

IMF forecasting

Deviation

T 2020 2021 2022 2023 2024 2025 2026 2027 T 2020 2021 2022 2023 2024 2025 2026 2027 T 2020 2021 2022 2023 2024 2025 2026 2027

UAE 371.6 381.3 390.9 400.6 410.2 419.8 429.5 439.1 UAE 358.869 409.967 501.354 506.234 518.077 535.71 558.714 586.359 UAE 12.7566 -28.6998 -110.445 -105.684 -107.885 -115.876 -129.239 -147.242

Iraq 172.5 176.6 180.8 184.9 189.0 193.1 197.2 201.3 Iraq 169.488 209.507 297.341 299.409 301.919 307.272 316.618 329.582 Iraq 3.0546 -32.8573 -116.584 -114.545 -112.948 -114.194 -119.433 -128.29

Kuwait 139.6 143.0 146.5 149.9 153.4 156.8 160.2 163.7 Kuwait 105.949 135.352 186.61 180.665 176.64 176.552 179.072 183.101 Kuwait 33.6246 7.6667 -40.1462 -30.7561 -23.286 -19.7529 -18.8278 -19.4117

Oman 78.6 80.7 82.8 84.9 87.0 89.0 91.1 93.2 Oman 72.056 83.656 110.127 110.25 109.184 110.321 112.614 115.757 Oman 6.5664 -2.9502 -27.3378 -25.3774 -22.228 -21.2816 -21.4912 -22.5508

Qatar 155.0 159.4 163.8 168.2 172.6 177.1 181.5 185.9 Qatar 144.411 179.571 225.716 228.356 230.717 238.01 247.175 256.906 Qatar 10.5494 -20.1922 -61.9188 -60.1404 -58.083 -60.9576 -65.7042 -71.0168

KSA 793.3 811.9 830.5 849.1 867.7 886.3 904.9 923.5 KSA 703.368 833.541 1040.166 1021.905 1027.21 1045.572 1072.436 1107.707 KSA 89.896 -21.675 -209.698 -172.835 -159.538 -159.298 -167.56 -184.229

Source: Compiled and calculated by the authors based on data (Arab Monetary Fund, 2022; IMF, 2022; The Arab Investment & Export Credit Guarantee Corporation, 2021)

The Impact of COVID-19 on the Economies of Petroleum-Exporting Middle Eastern Countries

COVID-19 had a negative impact on FDI in most countries (World Bank, 2022b). With the exception of the UAE and the KSA, the COVID-19 pandemic negatively affected the flow of incoming foreign direct investment to the countries of the Middle Eastern region. The foreign trade of countries is one of the most affected economic activities under the influence of the COVID-19 pandemic (World Bank, 2022a; World Bank, 2022d) because the pandemic has had negative effects on exports and imports at the international level. The countries affected by the restriction of foreign trade include the MEOE countries due to several reasons: 1. The decrease in the volume of imports caused by the decrease in the volume of internal demand and the volume of global supply as a result of the outbreak of the COVID19 pandemic; 2. The decrease in the volume of exports caused by the decrease in the volume of global fossil fuel consumption, which occupies the main proportion of exports of energyexporting countries (British Petroleum (BP), 2022). The COVID-19 pandemic also affected the unemployment rate in the considered countries (World Bank, 2022e). Comparing the impact of COVID-19 on the unemployment rate in the UAE, Iraq, Kuwait, Oman, Qatar, and the KSA with the pre-pandemic period, the authors found that there was an increase in the unemployment rate in these countries as a result of preventive measures to reduce the pandemic and stop economic and productive activities in these countries.

4

Conclusion

Although the Middle East oil-exporting countries have crude oil and natural gas reserves, the COVID-19 pandemic has negatively affected the global economic indicators of these countries, including GDP, foreign trade, movement of capital between countries, employment, poverty rate, etc. The gross domestic product in the Middle Eastern region was negatively affected by the COVID-19 pandemic because the oil-exporting countries of the region were exposed to large losses in the GDP. The most affected countries in the region by the loss are Saudi Arabia, followed by Kuwait, UAE, and others. The conducted research also shows that the foreign trade of the oil-exporting countries of the Middle East has shrunk for several reasons, including the following: • The decline in global consumption of fossil fuels; • The decrease in aggregate internal demand caused by the decrease in the internal and external supply of goods and services due to the preventive measures and the

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suspension of transportation due to the fear of the pandemic outbreak.

References Alabdulkarim, N., Altwaijri, N., Alsultan, F., Albaradie, R. S., & Bashir, S. (2021). Perspective of COVID-19 pandemic in Middle East countries. Journal of Family Medicine and Primary Care, 10(4), 1534–1539. https://doi.org/10.4103/jfmpc.jfmpc_2025_20 Arab Monetary Fund. (2022). Annual report, 2018–2020. Accessed May 2, 2022, from https://www.amf.org.ae/ar/publications/altqryralsnwy. Aras, B., & Kardaş, Ş. (2021). Geopolitics of the new Middle East: Perspectives from inside and outside. Journal of Balkan and Near Eastern Studies, 23, 397–402. https://doi.org/10.1080/19448953. 2021.1888251 British Petroleum (BP). (2022). Statistical review of world energy the shift project. Accessed May 3, 2022, from https://www.bp.com/en/ global/corporate/energy-economics/statistical-review-of-worldenergy.html. Chaplyuk, V. Z., Alam, R. M. K., Abueva, M. M.-S., Hossain, M. N., & Humssi, A. S. A. (2021). COVID-19 and its impacts on global economic spheres. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 824–833). Springer. https://doi.org/10.1007/978-3-03069415-9_94 Dabrowski, M., & Domínguez-Jiménez, M. (2021, June 14). The socioeconomic consequences of COVID-19 in the Middle East and North Africa. Bruegel Blog. Accessed May 9, 2022, from https://www. bruegel.org/2021/06/the-socio-economic-consequences-of-covid19-in-the-middle-east-and-north-africa/. Easley, K., & Cox, S. (2007). HCSB harmony of the gospels. [edition missing]. B&H Publishing Group. Accessed May 2, 2022, from https://www.perlego.com/book/2694042/hcsb-harmony-of-thegospels-pdf. Fawcett, L. (2021). The Middle East and COVID-19: Time for collective action. Globalization and Health, 17, 133. https://doi.org/10. 1186/s12992-021-00786-1 Hinojosa, N., & Acosta, L. (2021). Economic impact of COVID-19 in Asia, Europe, North Africa and the Middle East. Open Journal of Business and Management, 9, 2640–2651. https://doi.org/10.4236/ ojbm.2021.95145 Hoogeveen, J. G., & Lopez-Acevedo, G. (Eds.). (2021). Distributional impacts of COVID-19 in MENA. MENA development report. World Bank. Accessed May 9, 2022, from https://openknowledge. worldbank.org/bitstream/handle/10986/36618/9781464817762.pdf? sequence=2&isAllowed=y. IEA. (2020). Oil 2020: Analysis and forecast to 2025. : IEA. Accessed May 9, 2022, from https://doi.org/10.1787/cf9397c0-en. IMF. (2022). GDP by countries. Accessed May 2, 2022, from https:// www.imf.org/external/datamapper//export/excel.php?indicator= NGDPD. Kausch, K. (Ed.). (2015). Geopolitics and democracy in the Middle East. FRIDE. Accessed May 9, 2022, from https://www.files.ethz. ch/isn/192421/Geopolitics%20and%20democracy%20in%20the% 20Middle%20East.pdf. Middle East. (2021, February 9). In Encyclopedia Britannica online. Accessed May 9, 2022, from https://www.britannica.com/place/ Middle-East. O’Sullivan, A., Rey, M. E., & Mendez, J. G. (2011). Opportunities and Challenges in the MENA Region. The Arab world competitiveness report, 2011–2012. Working paper. Accessed May 9, 2022, from http://www.oecd.org/mena/49036903.pdf.

118 Petrovskaya, M. V., Chaplyuk, V. Z., Alam, R. M. K., Hossain, M. N., & Al Humssi, A. S. (2022). COVID-19 and global economic outlook. Current problems of the world economy and international trade. Research in Economic Anthropology, 42, 127–139. https:// doi.org/10.1108/S0190-128120220000042013 Rahman, K. (2008). Internal factors affecting the Middle East: Trends and implications. Policy Perspectives, 5(1), 1–22. Accessed May 2, 2022, from http://www.jstor.org/stable/42909183. Sawaya, T., Ballouz, T., Zaraket, H., & Rizk, N. (2020). Coronavirus disease (COVID-19) in the Middle East: A call for a unified response. Frontiers in Public Health, 8, 209. https://doi.org/10. 3389/fpubh.2020.00209 SeyyedHosseini, S., & BasirianJahromi, R. (2021). COVID-19 pandemic in the Middle East countries: Coronavirus-seeking behavior versus coronavirus-related publications. Scientometrics, 126, 7503–7523. https://doi.org/10.1007/s11192-021-04066-y The Arab Investment & Export Credit Guarantee Corporation. (2021). Most important economic indicators in Arab countries view. Accessed May 2, 2022, from https://www.dhaman.net/wp-content/ uploads/2021/05/EconomicIndicatrors-ar.xlsx. World Bank. (2022a). Exports of goods and services. Accessed May 1, 2022, from https://data.worldbank.org/indicator/NE.EXP. GNFS.CD. World Bank. (2022b). FDI, net inflows 2016–2021. Accessed May 2, 2022, from https://data.worldbank.org/indicator/BX.KLT.DINV. CD.WD.

V. Z. Chaplyuk et al. World Bank. (2022c). GDP, 2016–2021 (current US$). Accessed May 2, 2022, from https://data.worldbank.org/indicator/NY.GDP. MKTP.CD. World Bank. (2022d). Import of goods and services. Accessed May 6, 2022, from https://data.worldbank.org/indicator/NE.IMP. GNFS.CD. World Bank. (2022e). Unemployment, total (% of the total labor force), 2016–2021. Accessed May 7, 2022, from https://data.worldbank. org/indicator/SL.UEM.TOTL.ZS. World Health Organization (WHO). (2020, March 11). WHO DirectorGeneral’s opening remarks at the media briefing on COVID-19. Accessed May 2, 2022, from https://www.who.int/director-general/ speeches/detail/who-director-general-s-opening-remarks-at-themedia-briefing-on-COVID-19%2D%2D-11-march-2020. World Population Review. (2022). Oil reserves by country, 2022. Accessed May 2, 2022, from https://worldpopulationreview.com/ country-rankings/oil-reserves-by-country. Worldometer. (2022). COVID-19 pandemic. Coronavirus cases. Accessed May 2, 2022, from https://www.worldometers.info/ coronavirus/coronavirus-cases/. Zulfqar, S. (2018). Competing interests of major powers in the Middle East: The case study of Syria and its implications for regional stability. Perceptions, XXIII(1), 121–148. Accessed May 9, 2022, from https://dergipark.org.tr/tr/download/article-file/815459.

The Impact of COVID-19 on Global Socio-Economic Spheres and International Migration Maria V. Petrovskaya, Vladimir Z. Chaplyuk, Md. Nazmul Hossain, Milana M. -S. Abueva, and Ahmad S. Al Humssi

Abstract

The paper aims to examine the impact of the COVID-19 pandemic on global economic indicators through three main stages: the pre-pandemic, the pandemic, and the recovery stages. The paper is mainly based on secondary data sources, including books, research papers, scientific articles published in international journals, reports from the World Bank, IMF, and WTO, and national and international statistic agencies regarding the discussed issue. The research field includes the global national product, international trade, international investments, inflation rate, the global poverty and unemployment rate, and the international migration rate. The research found that COVID-19 has negatively impacted the country’s macroeconomic indicators, poverty, and immigration, which varies from country to country and is related to preventive measures, which, in turn, are related to the country’s economic and health capabilities. Keywords

COVID-19 · World economy · Global poverty rate · International migration · Unemployment

JEL Codes

F22 · O15 · E24 · Q40 · Q41 · Q43 · F66

M. V. Petrovskaya (✉ ) · V. Z. Chaplyuk · M. N. Hossain · M. M. -S. Abueva Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia A. S. Al Humssi Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia Financial University under the Government of the Russian Federation, Moscow, Russia

1

Introduction

Coronaviruses have been a large family of viruses (National Institute of Allergy and Infectious Diseases (NIAID), 2022) since the 1920s, which did not have a noticeable economic impact. The situation is getting increasingly dangerous due to different types of viruses: SARS-CoV, MERS-CoV, and SARS-CoV-2, which cause COVID-19 (Médecins Sans Frontières, 2022). The world has never witnessed an outbreak of the emerging coronavirus disease, COVID-19, which poses a major threat to the global economy. The spread of the COVID-19 pandemic has negatively affected all aspects of life, whether at the internal or external level because it covers the economic and social sectors of countries (World Health Organization (WHO), 2022). In 2020, countries began imposing gradual ban measures to limit the spread of the pandemic. The spread of the COVID-19 pandemic forced countries to take preventive measures to reduce the health and economic effects of COVID-19. Due to the lack of understanding of the mechanism of the spread of the pandemic, the countries have taken primary health measures at the expense of their economies, which has damaged these economies and, in turn, significantly raised the unemployment rate worldwide. Moreover, measures restricting movement between countries were introduced, which prevented migration between countries and thus increased the global poverty rate. Despite the weakness of the economies of many countries, they took severe preventive measures that led to the destruction of their economies. Thus, these countries need a long period to recover from the effects of this pandemic. Nevertheless, compared to the more developed countries, the COVID-19 pandemic has not significantly impacted the economies of developing countries. We can note that the relationship between the spread of the pandemic and economic growth is an inverse relationship. In other words, if the severity of the pandemic and the extent of the pandemic spread increase, the negative effects on the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_21

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global economy also increase, which leads to a downturn in the global economy and vice versa. In this research, the authors seek to determine the effects of the COVID-19 pandemic on the global economy and international migration. Due to the great impact of the COVID-19 pandemic on the economic and social life of countries and its direct impact on international migration, the authors found many studies that examined the impact of this pandemic on the economic indicators of countries. For example, Chaplyuk et al. (2021), Petrovskaya et al. (2022), Mohapatra et al. (2020), Morgan et al. (2021), and Dennis (2020) studied the impact of COVID-19 on the global economy. Other studies examined the relationship and the impact of COVID-19 on international trade (Kiyota, 2022; Pauwelyn, 2020) and poverty (Whitehead et al., 2021). The new WHO/World Bank reports also warn that financial hardship is likely to become more intense as poverty grows, incomes fall, and governments face tighter fiscal constraints (Sabet-Parry & Guo, 2021).

2

Methodology and Data

The COVID-19 pandemic has affected the economic indicators of countries, including such indicators as a gross domestic product, unemployment, poverty, and immigration. In this research, the authors seek to determine (1) the impact of COVID-19 on the global economy and (2) the impact of COVID-19 on international migration. The authors apply statistical and mathematical methods to detect the impact of COVID-19 on the global economy and international migration, based on various data, releases, and resolutions issued by international organizations, such as the World Bank, the World Health Organization (WHO), the World Trade Organization (WTO), etc.

3

Empirical Analysis and Results

To measure the impact of COVID 19, it is necessary to identify the channels through which COVID-19 can affect the economic and social life of countries and international migration. The global gross domestic product has been negatively affected by the COVID-19 pandemic (World Bank, 2022). In 2020, there was a decrease in global GDP, which was mainly due to the global COVID-19 pandemic, as factories and laboratories were closed or stopped due to restrictive measures imposed. The world economy shook. Mills and industries closed. Airlines and tourism industries went bankrupt. Millions of workers in the service sector were fired.

People with low income, self-employed, micro-and small businesses, daily wages workers, and illegal immigrants were the hardest hit (Chaplyuk et al., 2021). The spread of the COVID-19 pandemic significantly affected international trade. Due to the COVID-19 pandemic, the volume of trade between countries has significantly decreased due to several factors: • Decreased production of goods and services due to preventive measures; • Existence of restrictions on the transportation of goods and services between countries; • From the point of view of UNCTAD, the positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions, and a strong recovery in demand due to the economic stimulus package (UNCTAD, 2022). The spread of the COVID-19 pandemic had its physical and moral effects on global financial markets (Zhao et al., 2022), such as inward FDI. In 2008, global financial markets witnessed the collapse and worst performance since the outbreak of the global financial crisis (Akhmedov et al., 2021); COVID-19 gave a negative indication of the investors’ sense of the trends of the impact of COVID-19 on the global economy and, at the same time, the increase in financial risks for companies and countries (Berzon et al., 2022). The COVID-19 pandemic had a significant negative impact on FDI (OECD, 2022). In 2020, global FDI fell by 42% (UNICTAD, 2021). However, this indicator strongly rebounded in 2021, but the recovery is still highly uneven (Chaplyuk et al., 2022; UNICTAD, 2022). COVID-19 affected tourism and transport; the number of flights was reduced, and many airports worldwide were closed (International Organization for Migration (IOM), 1953). Under COVID-19, the number of travelers in the world has decreased significantly for several reasons, namely the fear of the outbreak of the COVID-19 pandemic, the preventive restrictions, the closure of airports, and the large cancellation of land and air tourist trips.

3.1

COVID-19 and International Migration

Migration is not acute and random; it has been around for a long time. It has spread for a long time along the stages of human life on this earth due to many economic, social, and other factors. As previously shown, the COVID-19 pandemic negatively affected all economic and social aspects of countries

The Impact of COVID-19 on Global Socio-Economic Spheres and International Migration

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Fig. 1 The main factors affecting international migration in light of COVID-19. Source: Compiled by the authors

and societies. As a result, it had a negative impact on international migration. In this research, the authors determine the impact of COVID-19 on international migration (Fig. 1). COVID-19 has negative effects on the global economy: a declining global GDP of goods and services, low levels of trade between countries, restrictions on capital flows, increased government spending, public and foreign debt, etc. In addition to other factors without the impact of the COVID-19 pandemic (such as difficult life conditions), as well as life aspirations, these factors led to an increase in the desire of people to emigrate from the countries of their origin. With the beginning of the spread of the COVID-19 pandemic in 2020, countries began to impose travel restrictions and other restrictions on receiving migrants to limit the spread of the COVID-19 pandemic. The impact of COVID-

19 on the global economy and migration can be explained by the following model: MIGcoef: = HPOVr þ HUr þ LACJopp: þ ASPJopp þ PURwb&BLC ð1Þ where: MIGcoef.—migration coefficient; HPOVr—high poverty rate; HUr—high unemployment; LACJopp.—lack of job opportunities; ASPJopp—aspiration for better job opportunities; PURwb & BLC—pursuit of well-being and better living conditions.

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Model (1) explains that the desire to emigrate is linked to several main factors, namely: high poverty, high unemployment, and lack of job opportunities in migrant-sending countries and better job opportunities and good living conditions (e.g., housing, employment) in migrant-reserving countries. Thus, with an increase in the phenomenon of immigration, it will exacerbate the economic problems in the migrant-sending countries, which can be listed in Model (2):

RMIGcoef: = LoM þ LoSC þ IcIgUn þ Dec:GDP þ Etc:

ð2Þ

where: RMIGcoef.—result migration coefficient; LoM—loss of manpower; LoSC—loss of scientific competencies, which leads to an increase; IcIgUn—increase in ignorance and underdevelopment. Thus, it will lead to considerable economic damage in the distant future, such as a decrease in the country’s GDP and other economic problems. Thus, the increase in migration will leave a number of economic and social problems in the countries of origin, the most important of which are the loss of human resources, loss of scientific competencies, increase in ignorance and underdevelopment, decrease in the country’s GDP, etc. Many economic and social problems have been exacerbated by the spread of the COVID-19 pandemic in 2020. Due to COVID-19, countries closed their borders to stranded migrants, including workers, students, and others, such as migrants traveling for medical treatment (McAuliffe & Triandafyllidou, 2021). If we consider these factors, we can build the model of migration under COVID-19 (Eq. 3): ΔMIGcoef:u COVID‐19 = InDM " TrSt: " RecRC " RMIGcoef:uCOVID‐19 # ΔMIGcoef:il "

ð3Þ

where: Δ MIGcoef.u COVID-19—migration coefficient under COVID-19; InDM—an increase in the desire to migrate compared to normal conditions (without COVID-19); TrSt.—transportation restrictions; RecRC—refusal of receiving countries to receive immigrants due to the COVID-19 pandemic;

RMIGcoef.uCOVID-19—resulting migration under COVID-19; MIGcoef.il "—illegal migration rates.

coefficient

It is somewhat difficult to assess the impact of COVID-19 on the transnational movement of international migrants across countries. However, estimates from the UN DESA (UNICTAD, 2021) indicate that COVID-19 may have reduced the growth of international migrants by about two million people. In other words, if there had not been COVID19, the number of international migrants in 2020 would have been around 283 million (United Nations, Department of Economic and Social Affairs Highlights (UNDESA), 2020–2021). In this way, it can be said that the COVID-19 pandemic has had physical effects not only on the economic and social life of individuals and countries but also on global migration rates through increased desire to migrate compared to normal conditions (before COVID-19) under transportation restrictions and refusal of receiving countries to receive immigrants due to the COVID-19 pandemic. Therefore, the sending countries witness poverty increase at a higher rate. Moreover, these countries experience higher unemployment rates compared to the pre-pandemic period, which leads to an increase in illegal migration rates.

4

Conclusion

The COVID-19 pandemic has had devastating economic and social effects because it destroyed the economies of countries, cut off trade, investment, and tourism relations, and claimed millions of human lives, as it can be called the global war of the twenty-first century. The COVID-19 pandemic has had physical effects not only on the economic and social life of individuals and countries but also on global migration rates, through increased desire to migrate compared to normal conditions (before COVID-19) under transportation restrictions and refusal of receiving countries to receive immigrants due to the COVID-19 pandemic. Therefore, the sending countries witness poverty increase at a higher rate. Moreover, these countries experience higher unemployment rates compared to the pre-pandemic period, which leads to an increase in illegal migration rates. Acknowledgements This article was performed in a framework of initiative scientific research № 060609–0-000 “The effectiveness of assessing and forecasting the financial security of the national economy”. Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia.

The Impact of COVID-19 on Global Socio-Economic Spheres and International Migration

References Akhmedov, F. N., Zeitoun, M. S., & Al Humssi, A. (2021). Financial engineering to optimize risk management in banks based on interest rate swaps to better hedge the exposure to interest rate fluctuations the case of banks in Syria. International Review, 1–2, 99–107. https://doi.org/10.5937/intrev2102101A Berzon, N. I., Novikov, M. M., Pozharskaya, E. L., & Bakhturina, Y. I. (2022). Monitoring the modern experience of financial risk management in Russia based on corporate social responsibility for sustainable development. Risks, 10(5), 92. https://doi.org/10.3390/ risks10050092 Chaplyuk, V. Z., Akhmedov, F. N., Zeitoun, M. S., Abueva, M. M.-S., & Al Humssi, A. S. (2022). The impact of FDI on Algeria’s economic growth. In E. G. Popkova & B. S. Sergi (Eds.), Geo-economy of the future (pp. 285–295). Springer. https://doi.org/10.1007/978-3030-92303-7_32 Chaplyuk, V. Z., Alam, R. M. K., Abueva, M. M.-S., Hossain, M. N., & Humssi, A. S. A. (2021). COVID-19 and its impacts on global economic spheres. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 824–833). Springer. https://doi.org/10.1007/978-3-03069415-9_94 Dennis, M. J. (2020). The impact of COVID-19 on the world economy and higher education. Enrollment Management Report, 24(9), 3–3. https://doi.org/10.1002/emt.30720 International Organization for Migration (IOM). (1953). Constitution (adopted October 19, 1953). IOM. Accessed May 2, 2022, from https://www.iom.int/constitution-and-basic-texts-governing-bodies. Kiyota, K. (2022). The COVID-19 pandemic and the world trade network. Journal of Asian Economics, 78, 101419. https://doi.org/10. 1016/j.asieco.2021.101419 McAuliffe, M., & Triandafyllidou, A. (Eds.) (2021). World migration report, 2022. IOM. Accessed May 2, 2022, from https://reliefweb. int/sites/reliefweb.int/files/resources/WMR-2022-EN.pdf. Médecins Sans Frontières. (2022). Medical activities, Coronavirus. Accessed April 2, 2022, from https://www.msf.org/coronavirus. Mohapatra, S., Priyanka, V., Mohapatra, S., Kohli, I., & Mishra, R. K. (2020). Impact of corona virus COVID-19 on the global economy. International Journal of Agricultural and Statistics Sciences, 16(2), 771–778. Morgan, A. K., Awafo, B. A., & Quartey, T. (2021). The effects of COVID-19 on global economic output and sustainability: Evidence from around the world and lessons for redress. Sustainability: Science, Practice and Policy, 17(1), 76–80. https://doi.org/10.1080/ 15487733.2020.1860345 National Institute of Allergy and Infectious Diseases (NIAID). (2022). Coronaviruses. Accessed May 7, 2022, from https://www.niaid.nih. gov/diseases-conditions/coronaviruses.

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OECD. (2022). FDI in figures. Accessed May 2, 2022, from https:// www.oecd.org/investment/investment-policy/FDI-in-FiguresApril-2022.pdf. Pauwelyn, J. (2020). Export restrictions in times of pandemic: Options and limits under international trade agreements. Journal of World Trade, 54(5), 727–747. Accessed May 1, 2022, from https:// kluwerlawonline.com/journalarticle/Journal%2Bof%2BWorld% 2BTrade/54.5/TRAD2020031. Petrovskaya, M. V., Chaplyuk, V. Z., Alam, R. M. K., Hossain, M. N., & Al Humssi, A. S. (2022). COVID-19 and global economic outlook. In E. G. Popkova & I. V. Andronova (Eds.), Current problems of the world economy and international trade (pp. 127–139). Emerald Publishing Limited. https://doi.org/10.1108/ S0190-128120220000042013 Sabet-Parry, R., & Guo, J. (2021). More than half a billion people pushed or pushed further into extreme poverty due to health care costs. WHO; World Bank. Accessed May 2, 2022, from https:// www.who.int/news/item/12-12-2021-more-than-half-a-billion-peo ple-pushed-or-pushed-further-into-extreme-poverty-due-to-healthcare-costs. UNCTAD. (2022). Global trade growth, 2022. Accessed May 2, 2022, from https://unctad.org/system/files/official-document/ ditcinf2022d1_en.pdf. UNICTAD. (2021, January 24). Global FDI fell by 42% in 2020, outlook remains weak. Accessed May 2, 2022, from https://unctad. org/news/global-foreign-direct-investment-fell-42-2020-outlookremains-weak. UNICTAD. (2022, January 19). Global FDI rebounded strongly in 2021, but the recovery is highly uneven. Accessed May 2, 2022, from https://unctad.org/news/global-foreign-direct-investmentrebounded-strongly-2021-recovery-highly-uneven. United Nations, Department of Economic and Social Affairs Highlights (UNDESA). (2020–2021). Annual highlights report, 2020–2021. Accessed May 2, 2022, from https://cdn.un.org/desa/Highlight_ Report_2020-2021.pdf. Whitehead, M., Taylor-Robinson, D., & Barr, B. (2021). Poverty, health, and COVID-19. BMJ, 372, n376. https://doi.org/10.1136/ bmj.n376 World Bank. (2022). GDP (current USD). Accessed May 2, 2022, from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD. World Health Organization (WHO). (2022). COVID-19 cases. Accessed May 14, 2022, from https://COVID19.who.int Zhao, L., Rasoulinezhad, E., Sarker, T., & Taghizadeh-Hesary, F. (2022). Effects of COVID-19 on global financial markets: Evidence from qualitative research for developed and developing economies. The European Journal of Development Research., 35, 148–166. https://doi.org/10.1057/s41287-021-00494-x

Development of the Pharmaceutical Industry: Current Trends and the Role of China Na Li

and Natalia A. Volgina

Abstract

JEL Codes

The pharmaceutical industry is one of the fastest growing knowledge-intensive sectors of the global economy, which has undergone significant changes in recent years. The purpose of this work is threefold: first, to evaluate some trends in the development of the pharmaceutical industry; second, to trace the dynamics of mergers and acquisitions in the pharmaceutical market; third, to identify the features of the development of pharmaceutical R&D outsourcing into China. Based on the research, the authors come to the following conclusions. The leading countries in the global pharmaceutical market (in terms of the share of healthcare costs in GDP and in terms of pharmaceutical output) are the USA, Switzerland, Germany, France, Japan, and, in recent years, China. To strengthen their positions and gain control over other companies in the industry, pharmaceutical multinationals (MNCs) from the leading countries increasingly use the M&A tool, the development of which has become an important trend in the pharmaceutical market. To increase financial stability and reduce R&D costs, pharmaceutical MNCs are also expanding the use of R&D outsourcing. In recent years, China has become the main market for the outsourcing operations of the largest pharmaceutical MNCs, which actively cooperate with Chinese contract research organizations. The economic policy of the Chinese government has become one of the most important factors influencing the accelerated development of China’s pharmaceutical industry.

F15 · F23 · F63

Keywords

Pharmaceutical industry · Pharmaceutical value chain · Pharmaceutical R&D · Mergers and Acquisitions (M&A) · China · Contract Research Organizations (CROs) N. Li · N. A. Volgina (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

1

Introduction

In the background of the economic crisis in 2020, caused by the COVID-19 pandemic, the pace of development of the global pharmaceutical industry did not fall but, on the contrary, showed high growth rates. Companies from countries such as the USA, Japan, Switzerland, Germany, France, and others are leaders in the global pharmaceutical market. China’s pharmaceutical industry is also developing rapidly. The impact of the COVID-19 pandemic is expected to lead to further fragmentation of production in the pharmaceutical sector to reduce costs, ensure the growth of the pharmaceutical M&A market, and expand pharmaceutical R&D outsourcing processes globally and in China. The purpose of this research is threefold: first, to evaluate some trends in the development of the pharmaceutical industry; second, to trace the dynamics and directions of mergers and acquisitions (M&A) in the pharmaceutical market; third, to identify the features of the development of pharmaceutical R&D outsourcing in China.

2

Methodology

The methodology of the research on pharmaceutical industry development is based on a comparative analysis, which will allow comparing the dynamics of the leading pharmaceutical countries in the market. Such research methods as analysis and synthesis make it possible to identify the peculiarities of production fragmentation processes in the pharmaceutical industry in the global market, as well as to make estimates of future trends. The main references for this research were official data from the World Bank (World Bank [DataBank], 2022),

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_22

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Statista portal (Statista, 2021, 2022), official data from Torreya (Torreya, 2021), official data from European Pharma (Balfour, 2021) and Fierce Pharma (Fierce Pharma, 2012; Liu, 2021), official data from several Chinese contract organizations, in particular, WuXi AppTec (WuXi AppTec, 2022) and Pharmaron (Pharmaron, 2019), and analytical studies by several authors.

3

Results

3.1

Dynamics of Pharmaceutical Industry Development

industry was $5.79 trillion, $6.65 trillion, and $7.03 trillion. In this context, the output value of the pharmaceutical industry in the main countries around the world in November 2021 was ($ million): the USA—2,793,782, China—840,261, Switzerland—539,394; Germany—413,935, and Japan— 375,314 (Statista, 2022). Over the years, the USA, Switzerland, Germany, Japan, and some others have been leading in terms of the size of pharmaceutical production in the world market. In recent years, China has moved into second place in terms of the cost of pharmaceutical production, behind only the USA.

3.2 To identify the macroeconomic trends in the development of the global pharmaceutical industry, we trace the share of healthcare costs in the GDP of different countries (Table 1). Over the past decade, the share of global health care costs has remained relatively stable, rising from 9.5% to 9.8% (+0.3%) over the 2010–2019 period. Simultaneously, Japan’s share increased from 9.1% to 10.7% (+1.6%); Switzerland’s share increased from 9.9% to 11.3% (+1.4%); Germany’s share increased from 11.1% to 11.7% (+0.6%); the share of the USA increased from 16.3% to 16.8% (+0.5%). The share of China was lower than that of the major countries but increased from 4.2% to 5.4% (+1.2%). The share of the EU remained stable at 9.9% (0%). The share of France decreased a little from 11.2% to 11.1% (-0.1%). Considering the overall level of health care costs as a share of GDP and the growth rate of these costs, we can conclude that the main leading countries in the pharmaceutical industry are the USA, Germany, Japan, and Switzerland. China’s pharmaceutical industry is showing significant positive dynamics. In the background of the economic recession of 2020–2022, connected with the costs of fighting the COVID-19 pandemic, the growth of the pharmaceutical industry did not fall but, on the contrary, showed an increment. According to Torreya (Torreya, 2021, p. 9), in 2019–2021, the output value of the global pharmaceutical

Mergers and Acquisitions in the Pharmaceutical Market

In the global economic recession, the reasons why the pharmaceutical industry can show steady growth are not only related to supporting people’s immediate health needs but also to make huge profits. On the one hand, competition in the global pharmaceutical market is limited because there are high barriers to entry into the industry due to the need for huge long-term investments in R&D. For example, it takes an average of 10–13 years to get a new concept drug launched and investment around $13.95 billion (DiMasi et al., 2016, p. 20). On the other hand, this often leads to the financial instability of the largest pharmaceutical MNCs. Additionally, a key factor hurting MNCs’ financial profits is the global development of the generics market. In fact, according to some estimates, the cost of a generic two years after its appearance in the market is, on average, 40% lower than the original drug (Ayazovich, 2019, pp. 21–23). Consequently, many of the patented drugs owned by pharmaceutical MNCs are losing price competition to generics. Therefore, to strengthen their market position, gain control over other companies in the industry, and maintain profit growth, most pharmaceutical MNCs use the instrument of M&A (as a form of foreign direct investment). In recent years, the pharmaceutical market has been characterized by a high intensity of M&A (Cherkasova, 2019, p. 95).

Table 1 Share of health care costs in GDP of selected countries, 2010–2019 (%) Years Countries The average level of the world USA EU Germany Japan Switzerland France China

2010 9.5 16.3 9.9 11.1 9.1 9.9 11.2 4.2

2011 9.4 16.2 9.8 10.8 10.5 10.0 11.2 4.3

2012 9.4 16.2 9.9 10.9 10.7 10.2 11.3 4.6

2013 9.4 16.1 10.0 11.0 10.7 10.5 11.4 4.7

2014 9.5 16.3 10.0 11.0 10.7 10.6 11.5 4.8

2015 9.7 16.5 9.9 11.2 10.7 11.0 11.4 4.9

Source: Compiled by the authors based on data from the World Bank (World Bank [DataBank], 2022)

2016 9.9 16.8 9.9 11.2 10.7 11.3 11.5 5.0

2017 9.8 16.8 9.9 11.3 10.7 11.5 11.3 5.1

2018 9.7 16.7 9.9 11.5 10.7 11.4 11.2 5.2

2019 9.8 16.8 9.9 11.7 10.7 11.3 11.1 5.4

Development of the Pharmaceutical Industry: Current Trends and the Role of China Fig. 1 The number of M&A deals in the biotechnology and pharmaceutical sector around the world, 1985–2020. Source: Compiled by the authors based on Statista data (Statista, 2021)

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1600 1400 1200 1000 800 600

400 200 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0

We shall consider the dynamics of M&A in the pharmaceutical market over the period 1985–2020 (Fig. 1). M&A in the pharmaceutical market continued to grow from 1985 to 2007, that is, before the financial crisis. The period of 2008–2013 was characterized by a declining trend as part of the industry’s post-crisis recovery process. Since 2014, the M&A market has returned to growth. However, in 2019, declines began to emerge again. In 2020, the market fell sharply in response to the COVID-19 pandemic. As seen in Fig. 1, the number of M&A deals increased from 32 in 1985 to 1376 in 2018. In 2019–2020 their number decreased to 1253 in 2019 and 895 in 2020 (Cherkasova, 2019). In 2020, there is a corporate example of a major M&A transaction, which influenced the growth in the value of the M&A market. As of December 1, 2020, the total value of M&A in the pharmaceutical (including biopharmaceutical) market equaled $228 billion (which was 13% lower than in 2019, equaling $262 billion), the second-lowest in the past five years (Balfour, 2021). In December 2020, AstraZeneca paid $39 billion to acquire the US biopharmaceutical company Alexion Pharmaceuticals (Liu, 2021). Therefore, in 2020, although the number of M&A deals was the lowest in nearly five years, the value of M&As increased and became the highest in the last five years.

The multistage and multidimensional nature of the pharmaceutical value chain creates favorable opportunities for transferring certain parts of the R&D process to other countries, first of all, to emerging market countries (Xu & Liu, 2018, pp. 1–4). The most important direction of pharmaceutical R&D outsourcing processes is China (Grimes & Miozzo, 2015, pp. 1–8). The integration of China into the R&D link of the global pharmaceutical value chain has been the focus of many researchers (Grimes & Miozzo, 2015, pp. 1–8). There is a consensus among them that the economic policy of the Chinese government has been one of the most important factors influencing the development of China’s pharmaceutical industry. The control of drug regulatory agencies has played a determining role. In 2015, China officially released the “Made in China 2025” document. The chapter “Biomedicine and HighPerformance Medical Devices” is the tenth major area of China’s strategic plan for the decade (Green Book “Made in China 2025” about technological innovation in key areas, 2016, p. 169). In 2022, China officially promulgated the “14th Five-Year Pharmaceutical Industry Development Plan” to continue promoting the development of the pharmaceutical industry deeply. The key objectives are as follows (“14th Five-Year” Development plan for China’s pharmaceutical industry, 2021, p. 10):

3.3

1. To promote pharmaceutical innovations; 2. To support the R&D development of pharmaceutical organizations at all stages; 3. To strengthen the protection of intellectual property.

Outsourcing Pharmaceutical R&D into China

Another important trend in the pharmaceutical market was the development of outsourcing processes, including R&D outsourcing. Even though outsourcing R&D is associated with sensitive problems of preserving intellectual property rights, it helped strengthen the market positions of large pharmaceutical MNCs, increasing their financial stability. It allowed them to reduce R&D costs and the time of R&D and accelerate the returns on financial investments (Bruche, 2009, pp. 267–288).

These goals illustrate the importance the People’s Republic of China attaches to the development of the pharmaceutical industry, including the encouragement of outsourcing from developed pharmaceutical countries. In recent years, under the influence of several factors (some of which were mentioned above), China has become the main market for outsourcing operations of major

128 Fig. 2 Size and forecast of the pharmaceutical R&D outsourcing market in China 2014–2020 (billion CNY). Source Compiled by the authors based on data from the TouBao Research Institute report (Sun, 2021, p. 14)

N. Li and N. A. Volgina 180 160 140

41.8

120 34.1

100

33

27.5 80

21.9

60

16.9

40 20 0

3.5 7 11.5 2016

4.7 8.6 15.7 2017

20.1

9.8 12.4

12.7 13.2

16.5

25.5

26.3

32.7

41.3

21.1 2018

2019

2020

2021E

2022E

7.5 10.2

28.4

24.1 83.5 53.2

62.7

2023E

2024E

2025E

Clinical trials - The data at the boom Preclinical development - The data in the middle Drug discovery and development - The data at the top

pharmaceutical MNCs. As the final link in bottom-up outsourcing (Volgina, 2021, pp. 150–162), the trend of development of the pharmaceutical R&D outsourcing industry in China is its steady growth (Sun, 2021, p. 14) (Fig. 2). As follows from Fig. 2, the Chinese market for contract research organizations (CROs) is steadily expanding: the Chinese CROs market was 22 billion CNY in 2016 and 52.2 billion CNY in 2020 at a compound annual growth rate of 24.1%. By 2025, the size of China’s CROs market is expected to grow to 158.3 billion CNY, with a compound annual growth rate of 24.9%. The high growth rate of the Chinese CROs market is based on strong Chinese government support, improved quality of research services due to strict regulatory rules, and its lower price compared to competitors. This attracts many pharmaceutical MNCs to China. As early as 2002, the large American pharmaceutical company Eli Lilly signed a contract with the Chinese pharmaceutical company ShangPharma to outsource its research in the area of diabetes. Nowadays, the companies of Big Pharma are expanding the outsourcing of some of their pharmaceutical R&D to several Chinese pharmaceutical research organizations. For example, the UK pharmaceutical company AstraZeneca had signed R&D outsourcing agreements with Chinese CRO WuXi AppTec for research arthritis drugs and with Pharmaron to speed the R&D of new drugs, as well as the German pharmaceutical company Merck (Fierce Pharma, 2012). According to a report by China’s CRO WuXi AppTec and Pharmaron in 2021, 20 foreign pharmaceutical MNCs (Big Pharma companies) selected them as contract research companies and outsourced certain research activities to them (Pharmaron, 2019, p. 8), (WuXi AppTec, 2022, p. 1). This means that Big Pharma companies outsourcing their pharmaceutical R&D processes to China is no longer the only case.

4

Conclusion

The global pharmaceutical industry is growing steadily in the background of the global economic crisis caused by the COVID-19 pandemic. This is mostly due to the processes of offshoring, which is the M&A, and the outsourcing processes that large pharmaceutical MNCs are conducting. China plays a significant role in these processes. M&A in the pharmaceutical market and outsourcing of pharmaceutical R&D to China will continue in the following years. This is because large pharmaceutical MNCs are pursuing a strategy of restructuring their pharmaceutical value chain to improve the efficiency of its single links, from product delivery to the end consumer to pharmaceutical R&D. In recent years, the R&D productivity of large pharmaceutical companies has dropped sharply, in spite of huge investments; relatively few innovative drugs have been developed. To reduce the cost of drug R&D and look for new forms of innovation, large pharmaceutical companies increasingly use M&A and outsourcing instruments to integrate China into a more global value China. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project № 060121-0-000.

References “14th Five-Year” Development plan for China’s pharmaceutical industry. (2021). Accessed September 13, 2022, from https://www.miit. gov.cn/cms_files/filemanager/1226211233/attach/202112/ 15b1431a91494ccb873f8e83b1f45077.pdf. Ayazovich, M. Z. (2019). Innovative development of the global pharmaceutical industry (Synopsis of dissertation of candidate of economics). Moscow, Russia: National Research Institute of World Economy and International Relations named after E.M. Primakov of the Russian Academy of Sciences.

Development of the Pharmaceutical Industry: Current Trends and the Role of China Balfour, H. (2021, January 8). Value of pharma’s M&A deals remain high, despite COVID-19. European Pharma review. Accessed July 8, 2022, from https://www.europeanpharmaceuticalreview.com/ news/138786/covid-19/. Bruche, G. (2009). The emergence of China and India as new competitors in MNCs’ innovation networks. Competition & Change, 13(3), 267–288. https://doi.org/10.1179/102452909X451378 Cherkasova, A. A. (2019). Analysis of the pharmaceutical market of M&A transactions. Bulletin of Magistracy, 11-4(98), 94–97. DiMasi, J. A., Grabowski, H. G., & Hansenc, R. W. (2016). Innovation in the pharmaceutical industry: New estimates of R&D costs. Journal of Health Economics, 47, 20–33. https://doi.org/10.1016/j. jhealeco.2016.01.012 Fierce Pharma. (2012). Top 10 Big Pharma investments in China. Accessed July 8, 2022, from https://www.fiercebiotech.com/ special-report/top-10-big-pharma-investments-china. Green Book “Made in China 2025” about technological innovation in key areas. (2016). Accessed September 13, 2022, from http://www. cm2025.org/uploadfile/2016/0321/20160321015412313.pdf. Grimes, S., & Miozzo, M. (2015). Big Pharma’s internationalization of R&D to China. European Planning Studies, 23(9), 1–8. https://doi. org/10.1080/09654313.2015.1029442 Liu, A. (2021, January 19). The top 10 largest biopharma M&A deals in 2020. Fierce Pharma. Accessed July 8, 2022, from https://www. fiercepharma.com/special-report/top-10-largest-biopharma-m-adeals-2020. Pharmaron. (2019). Pharmaron Report, 2019. Accessed July 8, 2022, from http://pdf.dfcfw.com/pdf/H2_AN201903011301405084_ 1.pdf.

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Statista. (2021). Number of merger and acquisition deals in biotechnology and pharmaceuticals sector worldwide from 1985 to 2020. Accessed July 8, 2022, from https://www.statista.com/statistics/ 965888. Statista. (2022). Total value of pharmaceutical sector worldwide 2021, by major country. Accessed July 8, 2022, from https://www.statista. com/statistics/1246608. Sun, X. (2021, July). Research report – 2021 China CRO industry. Chinese TouBao Research Institute. Accessed July 8, 2022, from https://pdf.dfcfw.com/pdf/H3_AP202109271518813471_1.pdf. Torreya. (2021, November). The pharma 1000. Top global pharmaceutical company report. Accessed July 8, 2022, from https://torreya. com/publications/pharma-1000-report-update-torreya-202111-18.pdf. Volgina, N. A. (2021). Pharmaceutical value chain: Opportunities for outsourcing. RUDN Journal of Economics, 29(1), 150–162. https:// doi.org/10.22363/2313-2329-2021-29-1-150-163 World Bank [DataBank]. (2022). Health nutrition and population statistics. Accessed July 8, 2022, from https://databank.worldbank.org/ source/health-nutrition-and-population-statistics# WuXi AppTec. (2022). Report: Productivity continues to grow strongly and key business expected to accelerate in 2022. Accessed July 8, 2022, from https://pdf.dfcfw.com/pdf/H3_ AP202203281555572761_1.pdf. Xu, V., & Liu, Y. C. (2018). China’s CRO pharmaceutical industry development status and trend analysis. Border Theory, “China Market”, 19, 1–4.

Optimization Diagnosis of Spasm of Accommodation among Students in the Osh State University Zhazgul B. Imetova , Dzhamiliya U. Kadyrkulova , Maksatbek E. Satyvaldiev , Kuttubek T. Abylov , and Baktyiar O. Abdurakhmanov

Abstract

1

The paper focuses on the optimization of the spasm of accommodation diagnosis. The authors examined 320 schoolchildren from Zirek, Yiman, Bilim, and KaraKuldzha lyceum in the Kara-Suu and Nookat regions and 698 students from KMOP, STEM, MIT, BM, PhysMat, and other faculties of the Osh State University based on complaints and clinical examination, diagnosed with spasm of accommodation. A spasm of accommodation, called false myopia or tired eye syndrome, is very common among students and schoolchildren who use cell phones. This research aims to optimize the diagnosis of the spasm of accommodation among students of Osh State University and schoolchildren. The research shows that increased visual load caused by cell phones and computer technology has become the primary cause of ciliary muscle dysfunction in ocular accommodation, leading to an increase in the number of patients with prolonged spasms of accommodation from visual tension. Schoolchildren, students, and young people of working age are most susceptible to this disease. Spasm of accommodation was found to reduce performance due to visual impairment as a factor in the progression of myopia at Osh State University.

Many people who work at a computer complain of rapid fatigue during long visual work at close range, pain in the eyeballs, temples, and frontal area. Ophthalmologists call this condition spasm of accommodation of the eye. Translated from Russian, accommodation means “adaptation.” Some experts call it “false myopia” because the loss of vision characteristic of this disease is temporary (Agarwal et al., 2020). This pathology is equally common in people with excellent vision and in those who wear glasses or contact lenses. This phenomenon can be explained quite simply from a medical point of view. In normal conditions, the eye muscles are relaxed, and the lens is flattened; vision focuses on distant objects. If a person focuses on one or another object located in the immediate vicinity for a long time, the muscles contract, causing the lens to acquire a convex shape. Statistically, this vision disorder occurs in 15% of the population. Schoolchildren and those whose work requires prolonged visual loads (programmers, jewelers, tailors, all people working at a computer, etc.) are subject to this disease more than others (Asabina, 1971). The following factors contribute to the contraction of the muscles that regulate the curvature of the lens:

Keywords

Optimization diagnosis · Accommodation spasm · Students · Schoolchildren · Osh State University

JEL Codes

I12 · I15 · I18 · I19 Z. B. Imetova (✉) · D. U. Kadyrkulova · M. E. Satyvaldiev · K. T. Abylov · B. O. Abdurakhmanov Osh State University, Osh, Kyrgyzstan

• • • • • •

Introduction

Insufficient level of lighting in the workplace; Long stay in front of the monitor or TV; Weakness of the neck and back muscles; Impaired blood supply in the vertebrobasilar region; Vitamin deficiency; Sedentary lifestyle.

It is not difficult for a specialist to recognize an accommodation spasm in time. As a rule, conservative treatment is chosen to stop involuntary muscle contraction. For this purpose, the ophthalmologist prescribes eye drops for fatigue, dilating the pupil. The duration of treatment depends on the severity of visual impairment and can vary from a few days to

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_23

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a month. The ophthalmologist may advise the patient to buy glasses as one of the correction methods. If the spasm is caused by a neck, back, or spine muscle disease, a doctor may prescribe physiotherapeutic procedures, including electrophoresis, magneto therapy, a massage course of the cervical-collar zone, acupuncture, and physiotherapy exercises. An excellent remedy for eye fatigue is the performance of special exercises, the essence of which is to develop the ability of the eye lens to change its configuration through training quickly. If students and schoolchildren have to spend much time at the computer, it is enough to blink quickly for a couple of minutes to rest the eyes. Eyes should be closed for a minute and eyelids lightly massaged, after which eyes should be closed tightly and then opened. Doing this exercise for about ten times will significantly improve eye function. Weakness of the accommodative apparatus of the eye due to hereditary structural deficiencies of the ciliary muscle and its insufficient training affect the outcome of the ciliary muscle in the body. Reduced regulation in ciliary muscle generates an even greater deterioration in the eye hemodynamics. Insufficient blood supply is the reason for the weakening of accommodation. The main role in accommodation and deaccommodation belongs to the ciliary body muscles, composed of different types of muscle fibers conjugation, such as cholinergic meridional fibers (Brucke’s muscle) and circular (Muller’s muscle) and radial (Ivanov’s muscle) adrenergic fibers. The last two muscles are disaccommodative because they contribute to the relaxation of accommodation. When the Brucke’s muscle contracts, the tension of the Zinn ligaments is weakened, which is immediately compensated by a change in the shape of the lens due to its elastic properties. Weaker circular and radial fibers of the ciliary muscle cannot fully deaccommodate during a spasm of accommodation (Ananin, 1989), which leads to permanent contraction of the ciliary body, characteristic accommodation spasm, blood squeezing, and suprachoroidal space enlargement, accompanied by a nutrition failure of the ciliary body and posterior sclera. Due to all of the above reasons, it is necessary to stimulate deaccommodative muscles of the ciliary body, which is immediately compensated by a change in the shape of the lens due to its elastic properties. In a myopic eye, the image formed in front of the retina is called axial myopia, in which the distance from the top of the retina cornea or eye axis is increased. In refractive myopia, the radius of the cornea curvature is small, and light rays are more refracted, causing spasm of accommodation or false myopia (Dashevsky, 1973), in which the fixed contraction of the ciliary muscle makes the myopic eye, leading to an increase in the thickness of the lens to form myopic refraction. Increased visual work at close range becomes difficult for the eyes in case of weakened accommodation. Under such conditions, the body needs to change the optical arrangement

Z. B. Imetova et al.

of the eyes to adjust them to work at close distances without straining the accommodation. This is achieved largely by lengthening the anteroposterior axis of the eye throughout its growth and refraction. An unfavorable hygienic environment of visual work affects myopia progression only in the area that impedes accommodation and contributes to excessive visual contact with the object of visual work.

2

Materials and Method

The range of examinations includes ophthalmic analysis of central corrected visual acuity, biomicroscopy of the anterior and posterior segments of the eye, ophthalmoscopy, and refractometry (Chetyz, 2007). The authors examined a group of 420 students from Osh State University and schoolchildren aged 7–25 diagnosed with the spasm of accommodation. High visual load associated with professional duties, reading, and computer work was found in all patients with the following complaints: decreased visual acuity, eye sensitivity, eye redness, and lacrimation. The examination of all patients included visometry, refractometry, and determination of accommodation reserves (Samatova, 2011).

3

Results

Patients’ complaints were of the same kind, distinctly related to the presence of visual load. Most of the daily visual workload was examined in people who work about eight hours a day for all their working hours, as shown in Fig. 1. According to the Sivtsev-Golovin table, when examining the central visual acuity, there is a decrease in vision from 0.5 to 0.6 (Ossenblok et al., 1994). Correction with negative lenses (from 0.5 to 1.5 diopters) provided visual acuity of 1.0. Next, refractometry was performed. The average refractometry values were -1.25 ± 0.05 diopters. Dry eye syndrome (DES) is currently found in adolescents and children. The main reason for the development of DES in this age is mainly the long-term use of various gadgets, including cell phones and computers. As a rule, an ophthalmologist detects students with DES during professional examinations. Increasing the accessibility of medical care for this category of patients allows them to be monitored to prevent complications and reduces difficulties in the care provided by ophthalmologists. DES is a multifactorial ocular surface disease characterized by impaired tear film homeostasis and ophthalmic symptoms accomplishment, in the progression of which the etiological function belongs to impaired tear film stability, hyperosmolarity, ocular surface damage and inflammation, and neurosensory changes. Damage to the ocular fundus ranges from minor/red eye syndrome to corneal ulcers and loss of the eyeball.

Optimization Diagnosis of Spasm of Accommodation among Students in the Osh State. . .

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Fig. 1 Difference in the results of the examination of students and schoolchildren for spasm of accommodation. Source: Developed by authors

4

Discussion

The occurrence of systemic diseases (hormonal disorders, autoimmune diseases, metabolic diseases, etc.) that cause the impaired production of the water component of the tear film was considered a primary cause of DES. The risk factors for the progression of DES include external (climatic and environmental conditions, occupational hazards, cell phones, computers, and halogen lighting) and internal risks (functional and pathological conditions and eye diseases, including lacrimal glands and Meibomian glands diseases). Additionally, risk factors for the development of DES include older age, being a student, female gender, smoking, low androgen levels, exposure to weather conditions (heat, cold, low humidity), work with video terminals and monitors, refractive surgery, wearing contact lenses, use of a number of drugs including antidepressants, beta-blockers, etc., systemic diseases such as diabetes mellitus, Sjögren’s syndrome, and rheumatoid arthritis. Based on the above definition of DES, the pathogenesis is based on impaired tear film stability. There are three layers in the tear film structure: lipid, mucin, and aqueous. The exterior lipid layer is derived from the secretion of the Meibomian glands on the eyelids and prevents evaporation of fluid from the cornea surface and conjunctiva. The aqueous layer in the center is secreted by lacrimal glands, making up the largest part of the tear film. The inner mucin layer is secreted by the conjunctiva goblet cells, the main function of which is to provide and maintain the hydrophilic properties of corneal epithelium, which allow the tear film to retain. The tear film performs the following functions: • Prevention from dehydration and provision of antimicrobial protection, including participation in the immune response protective; • Facilitation of the sliding of the eyelids over the external side of the eye, separation of unknown particles, and desquamation of epithelial cells;

• Flushing and nourishing the cornea and conjunctiva; • Light refraction by ensuring the cornea transparency and clarity of vision or optical functions. Damaged tear film may result in the impaired production of tears, mucins, and lipids, as well as increased tear fluid evaporation. The glands actively involved in the formation of the lipid layer are called Meibomian glands. They have a definite function in the formation of the tear film. Various diseases of organs and systems, as well as the tension of visual apparatus, can lower the quality of Meibomian glands secretion or lead to blockage of excretory ducts. Let us discuss dysfunctions considered the leading cause of DES. Tear film becomes hyperosmolar by losing its functions, including protective, metabolic, and others, which leads to inflammation of eye tissues and damage to peripheral nerves, including mechano- and thermoreceptors, resulting in the development of clinical symptoms such as dryness, damage to the eye surface, and eye pain. Against inflammatory reaction conditions, the lacrimal fluid composition changes, and the vicious circle closes. There are objective and subjective symptoms in the clinical signs of DES. Adhesion of eyelids edges in the morning, dry eyes, burning, a feeling of sand or a foreign body behind eyelids, photophobia, itching in the eyes, pain or discomfort in the eyes, and lacrimation are included in subjective symptoms. Objective symptoms include conjunctival hyperemia, mucous discharge in the form of threads; bulbar conjunctiva folds parallel to the edge of the eyelid, blepharitis, and SDC complications (corneal erosion and punctate keratitis). Additionally, DES is confirmed by data from additional studies, including biochemical studies, the presence of conjunctiva inflammatory markers, and staining with vital stains. Based on the presence of complications and severity of the disease, mild, moderate, severe, and especially severe degrees of DES are distinguished. When monitoring patients with a mild form of DES, if there are no complications, a general practitioner is

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competent to make a timely diagnosis; patients with severe complications are referred to an ophthalmologist. DES can reduce the quality of a patient’s life, in addition to subjective and objective manifestations with problems in reading, watching TV, or driving. A Long DES period causes the emergence of psycho-emotional disorders and depression. The collection of anamnesis is the first stage in the diagnostic examination of a patient with risk factors in the progress of DES, the identification of conditions and diseases that can lead to secondary DES, and signs (subjective and objective) of corneal-conjunctival xerosis. The following methods of DES diagnosing are recognized as the main ones: 1. Assessment of the stability of the peroneal tear film; 2. Study of osmolarity of the tear film (salt content in tear fluid); 3. The severity of the determination of xerotic changes in the ocular surface; in practice, fluorescein-staining tests are more commonly used (Strakhov et al., 1998). The condition of the cornea and conjunctiva can be assessed on a slit lamp using a cobalt light filter. Damaged areas of epithelium in the cornea are stained in a yellowgreenish color. Pathology is considered as such if the number of points of diffuse or dot staining exceeds ten. With DES, these erosions are first localized in the region of the lower third of the cornea and then spread to its entire area and conjunctiva. A break time test is performed to assess the stability of the tear film. One drop of 0.5% fluorescein solution is injected into the conjunctival fornix of each eye. The patient closes their eyes to remove excess dye. Two minutes after the injection of the solution, the patient blinks and then keeps their eyes open. Tear break-up time is the appearance of a dry spot on the cornea in the absence of blinking. If the tear break-up time is longer than the interval between blinks but less than ten seconds, then the tear film is unstable. The instability of the tear film contributes to local drying and hyperosmolarity of the ocular surface, damage to the surface epithelium, and disruption of the glycocalyx and goblet cell mucin (Xu et al., 2001). To reduce the evaporation of tears into the environment, active humidification of the room, especially in dry climates, and avoiding aggravating factors are recommended. An important component of the prevention of DES is the application of tear replacements, which are prescribed individually based on the condition of the visual apparatus and aggravating factors with concomitant diseases. Prevention of computer vision syndrome and treatment consists in the organization of the workplace, adjustment of working distances, optimization of the work process, and the proper

Z. B. Imetova et al.

use of moisturizing drops or artificial tear preparations, if possible, not protective, corresponding to the correct ametropia and astigmatism, to reduce the symptoms of dryness. The number of therapeutic measures in DES depends on the etiology, severity of the disease, and the presence of complications and comorbidities. A doctor prescribes medications and separately controls the patient during the initial period of disease without complications and with mild manifestations of the disease and a fairly approving prognosis. The first stage includes all preventive measures and prescription of tear substitute drugs. Low-viscosity preparations are used in mild clinical forms of DES; gel forms are used in moderate and severe forms of the disease. In extremely severe xerosis, low-viscosity preparations without a preservative are indicated. The first drugs proposed for the correction of DES were saline solutions. Their obvious drawback is the narrow area of influence (tear film aqueous layer) and very short contact time with the eye surface. Synthetic and natural polymers act primarily by replacing the tear film’s aqueous layer. Eye drops with moisturizing properties depend on the drug’s viscosity. The higher the drug viscosity, the longer the period of contact of the eye surface with the drug and hydration and preservation of the tear film. Moderate administration of drugs over the eye exterior prevents blinking problems. Viscosity can be increased in a higher concentration of drugs. The high amount of hyaluronic acid in gels (Chang et al., 2021; Salzillo et al., 2016; Vasvani et al., 2020; Zhang et al., 2014) is worse for patients and can cause discomfort and irritation when blinking. In mild clinical forms of DES, low-viscosity preparations are used in the form of solutions. The concentration of active substance from 0.1% to 0.3% is considered optimal. According to some authors, the protective properties of drugs, such as binding, moisture retention, and recovery, are not mainly characterized by the drug’s viscosity but by the product’s viscosity and concentration with molecular weight. Another important property of hyaluronic acid preparations is the presence of additives to ensure the safety of the main active ingredient. Simultaneously, additives can cause some complications and severe complicated forms of DES. The use of eye drops with additives is inappropriate or contraindicated. Certain artificial tear preparations can contain vital ingredients: • Dexpanthenol, basic mucopolysaccharides, polyvinyl alcohol, or vitamins are needed to speed up metabolic processes in the outer eye membranes; • Levocarnitine, glycerol, and erythritol are important for the osmoprotection of corneal and conjunctival epithelial cells;

Optimization Diagnosis of Spasm of Accommodation among Students in the Osh State. . .

• Resistance to dehydration; • Endogenous interferon production, polyvinylpyrrolidone, etc.

refreshed

by

All hyaluronic acid preparations can restore the lipid mucous layer.

5

Conclusion

The main task of our professional examination of the Osh State University students is the timely diagnosis of DES in the early stages, before the development of complications, as well as the identification of the cause of this disease. It is necessary to supervise students with mild forms of DES, prescribe tear substitutes, and take preventive measures when diagnosing DES (or its high probability). It is important to share the observation of professional examinations of the medical clinic of Osh State University among schoolchildren and students of Osh State University.

References Agarwal, D., Saxena, R., Gupta, V., Mani, K., Dhiman, R., Bhardawaj, A., et al. (2020). Prevalence of myopia in Indian school children: Meta-analysis of last four decades. PLoS One, 15(10), e0240750. https://doi.org/10.1371/journal.pone.0240750 Ananin, V. F. (1989). Accommodation and myopia. USSR. Asabina, V. A. (1971). State of health and previous diseases in children with spasms of accommodation in false and true myopia. Oftalmologicheskii Zhurnal, 26(4), 289–294.

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Chang, W. H., Liu, P. Y., Lin, M. H., Lu, C. J., Chou, H. Y., Nian, C. Y., et al. (2021). Applications of hyaluronic acid in ophthalmology and contact lenses. Molecules, 26(9), 2485. https://doi.org/10.3390/ molecules26092485 Chetyz, R. R. (2007). The role of extraocular pathology in the pathogenesis of myopia in children and its complex treatment (Dissertation of candidate of medical sciences). Moscow Helmholtz Research Institute of Eye Diseases. Dashevsky, A. I. (1973). False myopia. USSR: Medicine. Ossenblok, P., Spekreijse, H., & Reits, T. (1994). Chek size dependency of the hemifield-onset evoked potentials. Documenta Ophthalmologica, 88, 77–14. Salzillo, R., Schiraldi, C., Corsuto, L., D’Agostino, A., Filosa, R., De Rosa, M., et al. (2016). Optimization of hyaluronan-based eye drop formulations. Carbohydrate Polymers, 153, 275–283. https://doi. org/10.1016/j.carbpol.2016.07.106 Samatova, R. R. (2011). Development of methods for the prognosis and treatment of progressive myopia in children (Dissertation of candidate of medical sciences). St. Petersburg. Strakhov, V. V., Alexeev, V. V., & Remizov, M. S. (1998). Biomechanic and hydrodynamic aspects of accommodative eye hypertension. Experimental Eye Research, 67, 69. Vasvani, S., Kulkarni, P., & Rawtani, D. (2020). Hyaluronic acid: A review on its biology, aspects of drug delivery, route of administrations and a special emphasis on its approved marketed products and recent clinical studies. International Journal of Biological Macromolecules, 151, 1012–1029. https://doi.org/10. 1016/j.ijbiomac.2019.11.066 Xu, S., Meyer, D., & Yoser, S. (2001). Pattern visual evoked potential in the diagnosis of functional visual loss. Ophthalmology, 108(1), 76–80. https://doi.org/10.1016/S0161-6420(00)00478-4 Zhang, H., Huang, S., Yang, X., & Zhai, G. (2014). Current research on hyaluronic acid-drug bioconjugates. European Journal of Medicinal Chemistry, 86, 310–317. https://doi.org/10.1016/j.ejmech.2014. 08.067

Electronic Evidence in the Civil Proceedings: The Experience of the Republic of Korea Irina A. Gronic

Abstract

The paper aims to identify the features of electronic evidence in civil proceedings in the Republic of Korea. The author analyzes the current Korean legislation governing the evidence issues, including the digital age. The provisions on the use of electronic evidence, their collection, storage, transfer, and security are considered paying respect to the introduction of a new electronic document management system. When collecting and processing the material, the author uses the theoretical methods of formal and dialectical logic, description, comparison, analysis, and interpretation of legal norms. The author concludes on the relevance of using electronic evidence in civil proceedings in the Republic of Korea in the context of the general requirements for evidence. The paper shows that the clear need for electronic evidence in the digital era to establish the genuine facts of civil cases has positive and negative sides. Keywords

Civil procedure · Electronic court proceedings · Electronic evidence · Civil proceeding · Republic of Korea

JEL Codes

K10 · K39 · K49

I. A. Gronic (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]

1

Introduction

1.1

A Brief Overview of the E-Litigation Management Process

Before moving on to the topic of the study, it should be noted that the Republic of Korea is one of the leading countries using the digital space in legal proceedings, including the processing of court cases. The first steps towards creating an electronic judicial system were taken in 1979, and then the judiciary turned to the management of the “Korean Institute of Science and Technology (KIST) with a request to conduct a study on the possibilities of electronic justice” (Supreme Court of Korea, n.d.-a). Seven years later, the Supreme Court developed a civil litigation program that could use computer technology in civil cases; the Case Management System (CMS) was completed at the start of the new millennium. A little later, in 2010, the Electronic Case Registration System (Supreme Court of Korea, n.d.-c) was launched—“an electronic judicial system that is part of the Korean judicial system” (Supreme Court of Korea, n.d.-b). Through a comprehensive e-judicial format, parties and their lawyers have electronic court information access and other options. Besides, they can independently file claims, electronic evidence, and other court documents via the Internet without visiting the courts physically. It allows for tracking the current state of a court case and managing an electronic case (Gronik, 2021) easily and quickly. Civilization brings humanity to the fact that digital documents rapidly replace hard copies, and COVID-19 confirms this argument. First, electronic documents provide fast and high-quality service to the parties. Second, the maintenance of electronic records of court proceedings allows “reducing the costs associated with filing, distributing, and storing paper documents, and at the same time provide advanced court services, save energy, and realize the new

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_24

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trend of establishing green IT” (Supreme Court of Korea, n. d.-a). After a successful pilot test of the ECFS electronic litigation system in 2011, e-litigation was implemented in civil litigation, which allowed the judiciary to become more accessible to the local population at all stages of litigation, “materializing electronic filing and electronic case management” (Supreme Court of Korea, n.d.-a).

2

Materials and Methods

The regulatory framework of this includes the current legislation of the Republic of Korea: Civil Procedure Law (South Korea, 2021), Act on the Use of Electronic Documents in Civil Litigation (South Korea, 2020), Rules for the use of electronic documents in civil litigation (Supreme Court of Korea, 2021), and Rules for the collection, analysis, and management of digital evidence (Korea Fair Trade Commission, 2021). The theoretical basis for the study of the material was the research of such scholars as Rusakova and Frolova (2022), Inshakova et al. (2021), Kupchina (2020), Kang (2019), Ermakova and Frolova (2022), Rusakova et al. (2021). Researchers develop diverse approaches to understanding the phenomenon of “digitalization,” considering its impact on various fields and areas of knowledge. In particular, the issues of the use of digital technologies in the civil justice system, digital evidence, and the problems of their authentication in the civil justice system of the Asia-Pacific countries, the features of the functioning of the electronic judicial system, cybersecurity issues in the civil justice system, the use of artificial intelligence technology in the civil justice system (Kupchina, 2020), and some others.

2.1

Definition of Electronic Evidence under Korean Law

What remains unchanged is that no matter what type or form of evidence these or those data belong to, their presentation needs to be confirmed for the purpose of proof. If it is impossible to confirm the purpose of the evidence due to a large number of submitted materials, their content is difficult to perceive, or the purpose of the evidence is unclear, or the author or the date of the act and others are unknown, then the provision of explanations to the submitted evidence is mandatory. The explanatory note must indicate the document’s title, the date of compilation, the author and purpose of proof, and the original ownership. The purpose of the proof is to establish the main facts to be proved and, depending on the case, the details of the preparation or the facts to be proved in detail along with the case must also be described.

Summarizing the above, and referring to Articles 345–346 of the Civil Procedure Code of the Republic of Korea (South Korea, 2021), when claiming evidence, one must indicate the connection between the evidence and the facts. Further, we will consider electronic evidence more thoroughly. According to the amendments to the regulation of the Republic of Korea on the collection, analysis, and management of digital evidence No. 2021–39 (Korea Fair Trade Commission, 2021), which entered into force on December 30, 2021, “electronic evidence” refers to information stored or transmitted in digital form and that is of value as evidence of violations of laws and regulations under the jurisdiction of the Digital Commerce Commission. Thus, any “digital data,” that is, information stored on a digital medium or information transmitted electronically over a wired or wireless network, can fall under the characteristics of electronic evidence. The digital medium can be any suitable device for storing digital data. The most common digital media for storing or transmitting electronic evidence can be a computer disk (hard drive), memory card, mobile device memory (smartphone, tablet, and others), server, and mass storage device or digital device.

2.2

Characteristics of Electronic Evidence

In his study, Doctor of Law Kang Mi-young, a researcher at the Institute of Legal Studies of Busan National University, notes that electronic evidence is also a form of general evidence, but they differ from general evidence in that they “do not have a tangible form” (Kang, 2019). Electronic evidence is recorded and stored as digital information. Thus, it is an inanimate object with no form and is difficult to detect and prove. In other words, recognition of the necessary information is possible only through a “reader”—a digital device for displaying text in electronic form. The complexity of using electronic evidence lies in the fact that via simple combinations of actions, it is possible to copy information that is important for the consideration of the case, and it will be almost impossible to distinguish the original from the copy. Even during the copying process, the content and quality of digital information remain unchanged (Matytsin, 2021). An unhindered change in the essence of evidence is another circumstance that complicates proving when electronic evidence is the goal. In other words, evidence containing digital information can be modified by editing, deleted, or formatted, knowingly or unintentionally damaging the file or its digital media. Moreover, changes can only be made to the part of the electronic information that is significant as electronic evidence in civil proceedings in a particular case. The problem of the integrity (authenticity) of electronic evidence comes to the fore (Kang, 2019). Furthermore, returning to the difficulty of distinguishing an original

Electronic Evidence in the Civil Proceedings: The Experience of the Republic of Korea

from a copy, it is often difficult to identify a fake. It requires applying the knowledge and assistance of specialists in digital information technology.

3

Results

Regarding personal and public documents in Korea, there is a “presumption of authenticity (Articles 356 and 358 of the Code of Civil Procedure of the Republic of Korea)” (South Korea, 2021); a priori, it is believed that the fact of their authenticity cannot prove these documents presented as evidence. Moreover, the court can request the official place of issue only if there are doubts about the originality of personal documents or documents issued by public authorities. Concerning the proof of the authenticity of a private document, such a presumption does not apply, and the fact of authenticity must be proven. What about the determination of the authenticity of electronic evidence? Following the Code of Civil Procedure of the Republic of Korea (South Korea, 2021) and the Law on the Use of Electronic Documents in Civil Litigation of Korea (South Korea, 2020), verification of evidence on electronic documents can be carried out in several ways: • First, by examining evidence for the presence of information about signs, other symbols, drawings, photographs, and alike, using the method of viewing electronic documents using various means of visual rendering—a monitor, tablet, laptop, smartphone, and others. “Rendering” refers to the technology of reproduction of digital materials in all aspects, including the content and format of their storage in other digital media; • Second, the study of audio or video information evidence by listening to or viewing electronic documents. When verifying “the authenticity of electronic evidence, a copy of it can be verified in the same way as if it were the original evidence” (South Korea, 2020). Thus, the risk of damage to the original electronic evidence can be avoided. Moreover, even if the parties have tried to erase digital evidence, some unknown copies of it may exist; even if it is completely erased from the storage medium, it is possible to recover it. When examining to identify and establish a change in all electronic evidence or part of it, IT experts use special programs. However, some electronic evidence may be subject to time limits, such as electronic links limited by a period. We believe that Section 8 of the Korean Code of Civil Procedure applies to such electronic evidence (South Korea, 2021). In particular, Article 375 of the requirements for the security of evidence notes the following: “if the court considers that

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there are circumstances that make it difficult to use evidence if it is not checked in advance, then, at the request of one of the parties, the court may order an early examination of evidence under the provisions of section 8” (South Korea, 2021). The following matters must be disclosed in the evidence preservation statement: • Supporting facts for evidence; • Evidence to be preserved; • Reasons for the preservation of evidence that should be clarified. At the stage of examining the evidence, all the witnesses involved in a particular civil case, both on the part of the claimant and respondent, and other persons subject to be questioned, are intensively interrogated. In the event of a dispute between the parties, the court seeks to resolve the dispute amicably, using an advisory decision or a mediation system at any stage of the above procedures.

4

Conclusion

During the research, the author discovered the essential features of electronic evidence in civil proceedings in the Republic of Korea. The analysis of the current Korean legislation governing the use of electronic documents in civil proceedings, including the collection, analysis, and management of electronic evidence, revealed that the use of electronic evidence is undoubtedly important to establish the true circumstances in civil cases and determine the admissibility of evidence. However, this type of evidence is “information stored on a digital medium,” and the preservation of its integrity and reliability also requires confirmation. Acknowledgments The research was carried out at the expense of the Grant of the Russian Science Foundation No. 23-28-00157, https://rscf. ru/project/23-28-00157.

References Ermakova, E. P., & Frolova, E. E. (2022). Using artificial intelligence in dispute resolution. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 131–142). Springer. https://doi.org/10.1007/978-98116-4621-8_11 Gronik, I. A. (2021). Digital environment of civil proceedings in the Republic of Korea. In 3rd Bachilov readings. Digital transformation: Challenges to law and scientific research (pp. 289–295). Prospekt LLC. Inshakova, A. O., Sozinova, A. A., & Litvinova, T. N. (2021). Corporate fight against the COVID-19 risks based on technologies of industry

140 4.0 as a new direction of social responsibility. Risks, 9(12), 212. https://doi.org/10.3390/risks9120212 Kang, M.-y. (2019). The admissibility of digital evidence. HUFS Law Review, 43(3), 149–167. https://doi.org/10.17257/hufslr.2019.43. 3.149 Korea Fair Trade Commission. (2021). Rules for the collection, analysis and management of digital evidence, etc. (December 30, 2021. No. 2021–39, partially revised). Seoul, South Korea. Kupchina, E. V. (2020). Digital justice in the countries of the AsiaPacific region: The experience of Singapore. In N. V. Emelyanov (Ed.), Innovative aspects of the development of science and technology: Collection of selected articles of the international scientific and practical conference (pp. 92–99). Digital Nauka. Matytsin, D. E. (2021). The legislative innovations in the regulation of investment transactions made using the financial platform: Effectiveness evaluation. Legal Concept, 20(3), 125–137. https://doi.org/10. 15688/lc.jvolsu.2021.3.19 Rusakova, E. P., & Frolova, E. E. (2022). Introduction of digital methods of protection of rights as a legal guarantee of business activity in the modern world (on the example of China). In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 121–130). Springer. https://doi.org/10.1007/978-981-16-46218_10 Rusakova, E. P., Inshakova, A. O., & Frolova, E. E. (2021). Legal regulation of internet courts in China. In E. G. Popkova & B. S.

I. A. Gronic Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 1515–1521). Springer. https://doi.org/10.1007/978-3-030-69415-9_167 South Korea. (2020). Act on the use of electronic documents in civil litigation, etc. (Abbreviation: Civil litigation act) (June 9, 2020 No. 17354, other law amendments). Seoul, South Korea. Accessed January 15, 2022, from https://perma.cc/DV9U-VAQJ. South Korea. (2021). Civil procedure law (November 18, 2021. No. 18396). Seoul, South Korea. Accessed January 22, 2022, from https://www.law.go.kr/%EB%B2%95%EB%A0%B9/%EB%AF% BC%EC%82%AC%EC%86%8C%EC%86%A1%EB%B2%95. Supreme Court of Korea. (2021). Rules for the use of electronic documents in civil litigation. (June 10, 2021 No. 2980). Seoul, . Accessed January 22, 2022, from https://www.law.go.kr/법령/민사 소송%20등에서의%20전자문서%20이용%20등에%20관한%20 규칙/제26조. Supreme Court of Korea. (n.d.-a). e-Court system of Korea: History. Accessed 21 January 21, 2022, from https://eng.scourt.go.kr/eng/ judiciary/eCourt/history.jsp. Supreme Court of Korea. (n.d.-b). e-Court system of Korea: What is Electronic Case Filing System (ECFS)? Accessed 21 January 21, 2022, from https://eng.scourt.go.kr/eng/judiciary/eCourt/ eTrials.jsp. Supreme Court of Korea. (n.d.-c). Electronic Case Filing System (ECFS). Accessed 21 January 21, 2022, from https://ecfse.scourt. go.kr/ecf/ecfE00/ECFE00.jsp.

Reshaping the Institution of Liability in International Space Law Agnessa O. Inshakova

, Ruslan A. Konygin

Abstract

JEL Code

Over the past 70 years, human space activities have been regulated by a stable international legal regime. The legal framework for this regime is the Magna Carta of ISL—the 1967 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (the Outer Space Treaty). States have been major actors throughout the history of space activities. Due to their efforts, the provisions of the Outer Space Treaty and other treaties adopted to develop and enlarge individual articles of the former fully ensured proper intergovernmental cooperation. However, after private companies started to play a more significant role in space activities, the legal regime required consistent and corresponding changes. Considering that commercial operators are gaining stronger positions in the global space markets every year, basically displacing states, they are interested in comprehensive and efficient legal protection of their interests. This leads to the emergence of a new issue in international space law—the need to reorganize and reshape the liability institute, which does not currently provide actors involved in space activities with fair compensation for damage caused by space objects.

K33

Keywords

International space law · International air law · Space traffic management · Space traffic navigation · Responsibility · Liability

A. O. Inshakova (✉) Volgograd State University, Volgograd, Russia R. A. Konygin · A. I. Travnikov Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]

1

, and Alexandr I. Travnikov

Introduction

The gradual growth of various types of satellites that are in low near-Earth orbit, as well as the increasing interest of commercial companies in their launches, has caused an aggravating situation for the functioning of active satellites. The key approach to solving this problem is to create a reliable and efficient liability mechanism in the space sphere by reshaping the liability regime for national space activities and damage resulting from them. First, the reorganizing liability concept should begin with changing articles VI and VII of the 1967 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies (the Outer Space Treaty), and the norms of the Convention on International Liability for Damage Caused by Space Objects of 1972 (the Liability Convention) (UN General Assembly, 1972). To further the development of space activities, a distinct boundary must be drawn between what the state seeks to achieve and where the private sector puts its efforts: for the state—to protect the basic principles for space exploration in the interests of all of humankind through equality and non-discrimination; for business—to encourage and motivate to explore outer space. Consequently, there is an objective need for developing a new efficient mechanism of liability because not only states or international intergovernmental organizations are parties to extraterrestrial activities. The existing legal regime cannot ensure the safety and security of space navigation. Therefore, it is vital to analyze the present legal regime of outer space and the ISL regime of liability and determine the optimal ways of its development that would provide safe and secure space flights.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_25

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Methodology

The mechanisms of international legal regulation of space activities are dynamically developing. Consequently, it is necessary to pay attention to the dialectical method as the general scientific methodological basis. Moreover, in the course of researching the international legal regime of outer space and the legal regulation of space navigation, the authors apply a comprehensive systemic approach.

3

Results

Conducting space activities has always been associated with great risk for those who perform them. Unforeseen emergencies may arise during the entire cycle of a launch campaign. Space actors always anticipate that something could go wrong during the transportation of hardware, its testing, the launch, and the launch of a space object into orbit. Damage can be caused to people’s lives or the infrastructure itself. When an object is launched into low earth orbits, there is a risk of collision with orbital stations or operational satellites. However, the risk of collision becomes higher in the case of the explosion of the object itself. Then, one of the hundreds of small objects poses a danger. Such situations require a clear and robust regulation of international liability for the caused damage. This is especially relevant in current conditions of commercialization of human space activities when the main priority is to gain as much profit as possible. If we look closely at the ISL framework, we will see that responsibility for operations in space will be assigned to the main actors in space activities—the states. It turns out that government agencies or non-governmental entities are not directly responsible for space activities, regardless of the type of activity: launching a satellite or sending space tourists (although the states can use regressive claims against these legal entities in this case). Nevertheless, these issues are already out of the ISL scope. This fact is irrelevant since states are responsible for all actions performed by them. This provision was first embodied in the 1963 Declaration of Legal Principles Governing the Activities of States in the Exploration and Use of Outer Space (UN General Assembly, 1963). As many norms in international law, while advisory in nature, their zeitgeist was carried over in the subsequent development of the ISL into Article VI of the Outer Space Treaty. Thus, these rules of law have transformed and have become binding in nature. The development of the principle of international liability for damage caused by space objects is predicated on the risk

of negative consequences resulting from space activities. The principle is a logical extension of the principle of international liability for national space activities expressed in Article VII of the Outer Space Treaty. Based on Articles VI and VII of the Outer Space Treaty, liability may represent the result of damage caused not only by the actions of the state itself (represented by its entities) but also by non-governmental entities. Thus, the international legal consequences of such damage, namely the obligation to compensate for the damage caused, are fully the burden of the state concerned. The Liability Convention of 1972 was one great step forward in the history of the legal framework governing space activities. This convention became the successor to the Outer Space Treaty. It is worth mentioning that the wording of articles VI and VII of the Outer Space Treaty and the Liability Convention in the English edition have two notions: “responsibility” and “liability.” According to the doctrine (United Nations, 1986; Cheng, 1998), in the Anglo-Saxon legal family, the legal content of the term “responsibility” consists of responsibility for compliance with legal obligations and their violation, and the term “liability” means liability for the consequences of a violation of an international obligation by a subject of its international obligation. On the contrary, in the Russian edition of the treaties, the concepts of “responsibility” and “liability” are translated equally as “responsibility,” which does not affect the content of the two categories under consideration. In the ISL, the subject of international liability for damage (“liability”) is the launching state. In contrast, international responsibility for the compliance of national space activities with the ISL norms (“responsibility”) is imposed on any state. The ISL evokes two categories of international liability: absolute liability and liability depending on fault. Following history, humanity first conquered the air and then space. In the same way, we can refer to international air law. The principle of absolute liability has existed for a long time (Lachs, 2010). However, it is worth noting that the causer of the damage is a party to civil law relations. The air carrier is liable to passengers, cargo owners (Convention for the Unification of Certain Rules for International Carriage by Air, 1999; Convention for the Unification of Certain Rules Relating to International Carriage by Air, 1929), and third parties (Articles V, VI, IX of the Convention, Supplementary to the Warsaw Convention, for the Unification of Certain Rules relating to International Carriage by Air Performed by a Person other than the Contracting Carrier, 1961; Abashidze et al., 2021) for damages caused by the air carrier’s fault. Thus, we see that the elements of private

Reshaping the Institution of Liability in International Space Law

international law are reflected in public international law, forming a close and inseparable relationship between the two areas. The ISL also adopted the concept of absolute liability. However, in the ISL, unlike in international air law, liability for damage is not a civil law category but a public international law category. The specificity of these provisions is found in Article VII of the Outer Space Treaty. Let us simulate a situation in which a satellite of one private company collides with another satellite launched by a state space agency. This is where the “but” on the issue of liability comes in. In this case, even though the satellites belong to completely independent legal entities, the state will be responsible for them. Simultaneously, not every state is obliged to pay compensation for damage. Only the launching state is strictly liable to pay compensation under Article II of the Liability Convention. It is suggested to assign absolute liability to private operators of space activities by analogy with international air law. In this scenario, states would play only the role of the “guarantor of the fulfilment of the obligations by private entities” (Sidorova, 2004). In other words, a party affected by a foreign company’s space object should be able to hold that company liable for damage rather than the state of that company. This will significantly simplify the process of bringing to justice the party who caused the damage. Today’s major space companies must have sufficient financial potential to be directly responsible for their actions. Moreover, an international regime that imposes responsibility directly on space companies will create greater efficiency and certainty for these companies, which will ultimately benefit their business in general. Indeed, this would allow the aggrieved party to bypass the complicated process of contacting its state with a request to file a lawsuit and negotiate with the state of the launching company. Instead, the aggrieved party could work directly with the company whose space object caused the damage, thereby reducing the transaction costs associated with the claim (van Traa-Engelman, 1996). Additionally, the direct imposition of liability on companies would help avoid the difficulties associated with determining which state is a launching one and should be held accountable. The launch of an object into outer space is often performed by a private entity, namely, an operator (Matytsin, 2021). However, this operator may be registered and conduct its activities in one jurisdiction, do business in another, and launch objects from the territory of a third state (Jaramillo, 2010). The fact that the ownership of the payload can be distributed among several other private entities makes the situation more confusing. Moreover, these private entities may operate in different jurisdictions too. Thus, the boundaries of responsibility and ownership rights in the ISL are blurred and unregulated.

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Conclusion

For over 70 years, the risk of collisions has been increasing with each launch of objects into space. In this regard, low-Earth orbits are the busiest ones. They contain many active space objects, used parts of launch vehicles, and fragmented space debris. The latter poses the greatest danger to space activities. Additionally, the era of commercial space has begun just recently. Private companies have torn away the veil separating business from space. It is not only states and international organizations that are entering the “space scene.” In such an environment, the liability regime specifically designed for states is no longer working to its full potential. This gap must be filled shortly. Unfortunately, this issue so far falls under the decision of public international law, i.e., states that are not very familiar with private players in this area of activity. It is essential to find the solution to an alarming issue of the liability of commercial organizations engaged in space activities and its correlation with the international liability of states under the ISL. The comprehensive and coherent regulation of these problems together will facilitate the implementation of space activities and the development of the industry, in particular, will open up new ways to create a legal framework for space navigation. Acknowledgments The research is carried out with the financial support of the Russian Academy of Sciences in the framework of the scientific project № 20-18-00314 “Transformation of public relations in the context of Industry 4.0: legal prevention”.

References Abashidze, A. K., Inshakova, A. O., Solntsev, A. M., & Gugunskiy, D. A. (2021). Socio-economic inequality as a barrier on the path of sustainable development: “Institutional traps” and perspectives of overcoming them. International Journal of Sociology and Social Policy, 41(1–2), 62–75. https://doi.org/10.1108/IJSSP-032020-0069 Articles V, VI, IX of the Convention, Supplementary to the Warsaw Convention, for the Unification of Certain Rules relating to International Carriage by Air Performed by a Person other than the Contracting Carrier (signed on September 18, 1961). Guadalajara, Mexico. Accessed February 5, 2022, from https://www.jus.uio.no/ lm/air.carriage.warsaw.convention.guadalajara.supplementary.con vention.1961/landscape.letter.pdf. Cheng, B. (1998). Article VI of the 1967 Space Treaty Revisited: “International Responsibility,” “National Activities” and “the Appropriate State.”. Journal of Space Law, 26(1), 9–11. Convention for the Unification of Certain Rules for International Carriage by Air (signed on May 28, 1999). Montreal, Canada. Accessed February 5, 2022, from https://www.jus.uio.no/lm/air.carriage. unification.convention.montreal.1999/. Convention for the Unification of Certain Rules Relating to International Carriage by Air (signed on October 12, 1929), Warsaw, Poland. Accessed February 5, 2022, from https://www.jus.uio.no/lm/air. carriage.warsaw.convention.1929/portrait.pdf.

144 Jaramillo, C. (Ed.). (2010). Space security 2010. Waterloo, Canada: Library and Archives Canada Cataloguing in Publications Data. Accessed February 5, 2022, from https://swfound.org/media/ 29039/space%20security%20index%202010%20full%20report.pdf. Lachs, M. (2010). The new chapter of international law. In T. MassonZwaan & S. Hobe (Eds.), The law of outer space: An experience in contemporary law-making (pp. 24–25). Martinus Nijhoff Publishers. Matytsin, D. E. (2021). Retail investment financing via remote digital computer algorithm. Legal Concept, 20(2), 150–158. https://doi.org/ 10.15688/lc.jvolsu.2021.2.20 Sidorova, T. Y. (2004). Liability in international atomic and international space law (synopsis of dissertation of candidate of legal sciences). St Petersburg University. UN General Assembly. (1963). Declaration of legal principles governing the activities of states in the exploration and uses of outer space (adopted by resolution 1962 (XVIII) of December 13, 1963), New York, NY. Accessed February 5, 2022, from

A. O. Inshakova et al. https://www.unoosa.org/oosa/en/ourwork/spacelaw/principles/ legal-principles.html. UN General Assembly. (1972). Convention on international liability for damage caused by space objects (adopted by resolution 2777 (XXVI), opened for signature on March 29, 1972, entered into force on September 1, 1972), New York, NY. Accessed February 5, 2022, from https://www.unoosa.org/oosa/en/ourwork/spacelaw/ treaties/liability-convention.html. United Nations. (1986). Second report on international liability for injurious consequences arising out of acts not prohibited by international law (Document A/CN.4/402, 13 May 1986). Accessed February 5, 2022, from https://legal.un.org/ilc/documentation/ english/a_cn4_402.pdf. van Traa-Engelman, H. L. (1996). Commercialization of space activities: Legal requirements constituting a basic incentive for private enterprise involvement. Space Policy, 12(2), 119–128. https:// doi.org/10.1016/0265-9646(96)00003-3

International Legal Challenges to Biotechnological Products Agnessa O. Inshakova Solntsev

, Anastasia M. Otrashevskaya

, and Alexander M.

Abstract

Keywords

Biotechnologies have already improved and have taken a significant role in the sustainable development of human life in different aspects such as economy, medicine, education, nutrition, etc. Biotechnological products help farmers reduce the number of chemical pesticides, water, and fuel consumption for food production. They can also be used for environmental cleaning and food production at lower costs and reduce the use of harmful substances. However, biotechnologies have been criticized, for example, genetically modified organisms may not have fully investigated consequences, and unknown toxins may be produced by biotechnological products or reduce biodiversity, leading to genetic contamination and poisoning. This paper attempts to estimate the advantages and disadvantages of the current international law and various structures and bodies to solve possible problems. Issues of biotechnology at the international level and agreements and treaties related to each of them may include the following: patenting and intellectual property protection; transparency of export and import, labeling system, and establishment of international standards and procedures; possible damage caused by genetically modified imported products, international liability, compensation for harmful effects, and preventive measures; liability for transboundary, negative impact on the environment of neighboring countries, etc. After consideration, it can be concluded that there is no single “contractual regime” governing biotechnologies; we can find a disparate and contradictory “network” of agreements related to intellectual property, trade, and environment, as well as a number of general principles of law and rules.

Biotechnological products · International law · Patents · Nagoya Protocol · Genetic resources · Biosecurity

A. O. Inshakova (✉) Volgograd State University, Volgograd, Russia A. M. Otrashevskaya · A. M. Solntsev Рeoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]

JEL Codes

K33 · K32

1

Introduction

Thanks to biotechnologies, advanced revolutionary solutions are already being successfully adopted in various areas of society. The international community should promptly cooperate to create legal mechanisms for regulating various aspects. Scientists claim that the interaction between different genes will make it possible to treat such diseases as cancer, Alzheimer’s disease, and many others. The developed microorganisms and products can make a beneficial impact, increasing the geographical range of crops. Also, biotechnological means can be used for animal husbandry to improve the quality and quantity of resources (e.g., milk, eggs, meat, or wool, or even produce “healthier” animals) (Greely, 2016). It is possible to increase the supply and develop food products with higher nutritional value, the number of vitamins, and useful elements. Even though there are environmental concerns about the harmful effects caused by the manipulation of nature with the help of biotechnology, the positive application of biotechnology can be extremely diverse. Meanwhile, various national and international problems have arisen with the development of genetic engineering. Many consumers, scientists, and environmentalists believe that genetically modified products should not be distributed until long-term tests are carried out. The negative factors

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_26

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include toxins, antibiotic resistance, counterfeit, genetic contamination, etc. There is no scientific evidence of any damage, but scientists should do more research on the risks. Moreover, scientists are concerned about the possibility of disrupting the balance of the ecosystem. The international community should promptly respond to changes and challenges to introduce the necessary legal regulators. Currently, there are several mechanisms and documents regulating issues related to biotechnologies, including the following: • The Convention on Biological Diversity (CBD) (United Nations, 1992); • The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (Nagoya Protocol) (United Nations, 2010a); • The FAO Commission on Genetic Resources for Food and Agriculture; • The UNESCO International Bioethics Committee; • The WHO’s Expert Advisory Committee on Developing Global Standards for Governance and Oversight of Human Genome Editing; • The Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (World Intellectual Property Organization (WIPO), 1977); • The Cartagena Protocol on Biosafety (Secretariat of the Convention on Biological Diversity, 2000); • The Nagoya-Kuala Lumpur Supplementary Protocol on Liability and Redress (United Nations, 2010b).

2

Materials and Method

This study is based on general scientific methods and approaches, as well as special scientific methods of systemic and logical study. In other words, the authors applied the methods of deduction, induction, and dialectical analysis. Additionally, the authors applied other special methods such as systemic, structural, historical-legal, and comparative methods to investigate the subject and reach the following results.

3

Results

3.1

Intellectual Property Protection

There are various issues related to patents in the context of biotechnology in the field of agriculture and pharmaceuticals. Developed countries argue that intellectual property rights (IP) should be clearly regulated and protected. In turn,

developing countries argue that protection, access, and distribution issues will be expensive or even inaccessible. Many developed countries have access to the genetic diversity available in developing countries as an essential resource for genetic engineering; meanwhile, developing countries insist on sharing benefits available in their countries (Dederer & Herdegen, 2017). Issues arising in connection with patents and biotechnological inventions can be divided into several categories. The first category is related to legal regulations related to the scope of patent protection, issues about whether certain obtained substances are “inventions” or “discoveries” cause widespread debate, as well as inventive activity, industrial applicability, and disclosure requirements, the requirements that “support” the non-disclosure of the invention’s “elements.” Licensing issues and final innovations can be covered by a large-scale patent issued at the “beginning” of innovation; it is extremely important to strengthen partnerships between the public and private sectors and generate income and investment. One of the elements of biotechnological inventions is the facilitation of the transfer of technology from basic research to applied research and commercialization. Considering the international structures and bodies that contribute to the protection of intellectual property, it is necessary to note the World Intellectual Property Organization (the WIPO). IP issues related to genetic resources discussed by the WIPO include the prevention of the illegal grant of patents, the “patentability” of inventions, and obtaining benefits (e.g., royalties). The WIPO member countries consider the possibility of using a unified IP system and developing a new disclosure requirement that would oblige patent applicants to indicate the source or origin of patents, as well as evidence of prior informed consent and benefit-sharing agreements, if any. The WIPO has created and maintains a collection of agreements on genetic resources, licensing agreements, and related information. The development of information tools and databases is one of the approaches to solving the problem of erroneous patents. Databases can help increase the degree of probability that information is localized and accessible when it is necessary during patent processing. The WIPO Intergovernmental Committee on Intellectual Property, Genetic Resources, Traditional Knowledge and Folklore develops possible requirements, issues of disclosure of resources in patent applications, and issues of using genetic resources, as well as transformations during the “Fourth Industrial Revolution.” Transformations during the “Fourth Industrial Revolution” are defined as a transformational change in technological capabilities and data processing capabilities combined with the fusion of digital, biological, and material aspects, in particular: genomics, gene

International Legal Challenges to Biotechnological Products

editing, synthetic biology, bioinformatics, the use of artificial intelligence in biological sciences, the application of digital technologies to genetic and genomic data, and the evolution of other technologies. This convergence of biological, digital, and material systems has the clearest consequences for biotechnology, food, agriculture, healthcare, and pharmaceuticals. The WIPO has been and is actively participating now in the discussion of issues in international forums related to biotechnology, including: • The development of the CBD in 1992 (United Nations, 1992); • The Nagoya Protocol (United Nations, 2010a); • The FAO Commission on Genetic Resources for Food and Agriculture; • The UNESCO International Bioethics Committee; • The WHO’s Expert Advisory Committee on Developing Global Standards for Governance and Oversight of Human Genome Editing; • The Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure in 1977 (World Intellectual Property Organization (WIPO), 1977), etc. Biotechnologies and the creation of modified organisms were the subject of extensive discussions by the CBD, which led to the adoption in the early 2000s of the Cartagena Protocol on Biosafety (Secretariat of the Convention on Biological Diversity, 2000) and the subsequent NagoyaKuala Lumpur Supplementary Protocol on Liability and Compensation (United Nations, 2010b). The CBD tries to consider the problems associated with ensuring access to materials and genetic resources and promote the equitable distribution of materials and products derived from genetically modified organisms. The CBD is an important step toward the development of the international regime of biotechnology. Meanwhile, the criticism of the document is that the rules and regulations are very general and leave much unsaid. Official negotiations on the CBD began in 1991 and were completed by the Summit in Rio de Janeiro in 1992. The hasty pace has led to insufficient time for the exchange of countries’ views. As a result, the text of the CBD is partly unclear, ambiguous, or even contradictory; the CBD does not consider the national and private actors in full (Schmid & Schmidt-Dannert, 2009). Article 19 of the CBD also concerns the management of biotechnology and the distribution of its benefits. The access regime is also a part of the CBD regulation. However, it is worth considering a more detailed within analyzing the Nagoya Protocol.

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3.2

Biotechnologies: Access, Import, Export, and Benefits Sharing

Another sensitive legal issue about biotechnologies is the appropriate level of transparency in the case of import and export. Countries may establish internal rules and national legislation for access to technologies, creation, development, and application of biotechnological products to assess the risks of modified products. Each country needs an effective system for identifying such products or for obtaining information from the importer or exporter. Information or declaration can be achieved through a labeling system. For example, in 1997, the EU adopted a law requiring labeling of genetically modified crops (Carroll & Charo, 2015). Governments should set standards for determining genetic content. The Cartagena Protocol on Biosafety (Secretariat of the Convention on Biological Diversity, 2000) was adopted to promote transparency. It provides an international framework for addressing environmental risks and consequences of certain genetically modified crops. The Cartagena Protocol is intended to ensure an appropriate level of protection against harmful effects on the conservation and sustainable use of biodiversity (Abashidze et al., 2021) and consider the risks associated with these products for human health. The Protocol allows trading in case two conditions are fulfilled. The supplied products intended for food, feed, or processing must be accompanied by documentation stating that such goods “may contain changes” and are not intended for deliberate environment introduction. The supply of products intended for “autonomous use” (e.g., in a laboratory) or for deliberate introduction into the environment (e.g., microorganisms, seeds for planting, or live fish distribution in water spaces) must be accompanied by identifying documentation. The importing country must confirm receipt and then grant or refuse to issue a permit. The Cartagena Protocol on Biosafety (Secretariat of the Convention on Biological Diversity, 2000) is a step in ensuring transparency of the export of biotechnologies (especially regarding the emissions into the environment) and addressing the issue of cross-border biotechnology. However, this Protocol contains significant gaps. For instance, one of the gaps is labeling projects that cause contradictions due to free trade agreements and obligations arising from the WTO agreements (Matytsin, 2021). The provisions of the Protocol and the WTO agreements should be complementary and should not imply amendments: the General Agreement on Tariffs and Trade and related agreements, such as the Agreement on the Application of Sanitary and Phytosanitary Measures (World Trade Organization (WTO), 1995) and agreements on trade barriers, etc.

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It is worth highlighting the Nagoya Protocol (United Nations, 2010a), which also regulates the regime of access and distribution of benefits from the use of genetic resources. The use of genetic resources means research and development in the field of genetic composition or biochemical composition of genetic resources, including the use of biotechnology. Biotechnology refers to any technological application using biological systems and living organisms or their derivatives to create or modify products or processes for specific purposes. Countries should cooperate in technical and scientific research and development programs. Annex 2 to the Nagoya Protocol includes biotechnologies in the list of benefits. The provisions of the Annex relate to issues of knowledge and technology, terms of delivery and provision of information and database, as well as biological diversity and biotechnology and its use (United Nations, 2010a).

3.3

Liability and Damages

Various modified foods can cause general harm. When such damage occurs, someone should be responsible for it; it should be determined who is responsible. There is an indefinable risk of harmful effects on ecosystems; for example, when spread to other natural species, the ability to manage these risks decreases when the genes of living organisms are exported around the world. For many years, the parties of CBD intend to continue the process of developing international rules and procedures concerning liability and compensation for damage caused by the transboundary movement of modified products (Sears & Wolt, 2012). According to the Cartagena Protocol on biosafety (Secretariat of the Convention on Biological Diversity, 2000), the process is limited to harmful effects caused by genetically modified products. Prospects for international liability treaties in this area will not have a positive effect (as practice shows for similar treaties in other fields of international law); they will not be supported by many importers and exporters of biotechnological products (governments and private companies). Developing such a legal regime, the international community faces difficulties unrelated to biotechnology, covering procedural issues (e.g., which courts have jurisdiction over the claims, make claims, enforcement of decisions in the courts of another country, the burden of proof, and limitations of liability). If a developing country is entitled to shared benefits when a biotech company develops a product using genetic resources located in the country, the responsibility should probably be shared. The issue of cross-border is becoming the most urgent. For example, tuna has been genetically modified in the laboratory to have a larger size than normal tuna; once it is

approved for widespread breeding in one country, there may be an adverse effect on tuna, affecting all parties involved in fishing. There are general principles of international law that recognize the national rights of countries to exploit their natural resources and, simultaneously, instruct governments not to allow the use of land for activities that harm the environment of other countries (e.g., Article 21 of the Stockholm Declaration (United Nations, 1972)), but it is not enough until the issues of countries’ responsibility for transboundary damage caused by their biotechnological applications are settled and regulated. Some multilateral legal regimes, such as the Cartagena and Nagoya Protocols, have established specialized bodies, such as compliance or implementation committees, tasked with stimulating compliance, encouraging compliance, and reviewing cases of non-compliance. Under the Nagoya Protocol, the members of the implementation or compliance committees, although elected by the governing bodies of the treaty instruments, are technical experts acting in their personal capacity and not as representatives of the parties, which allows for independent expert consideration of technical issues (United Nations, 2010a).

4

Conclusion

With the growing awareness of various fields of the application of biotechnology, it became clear that governments and private companies are currently investing huge sums of money in this area, including at the international level. However, the risks related to the application of biotechnology and legal gaps are being gradually identified, including the following: • IP protection: it is necessary to impose a legal regime that assumes the rights of developing countries or concentrates the most advanced biotechnologies and protects the “inventor.” • Transparency regarding the access, import, and export of biotechnological products: notification of the parties and labeling. • Liability for damage by genetically modified goods: there is an uncertain risk of harmful effects on ecosystems, issues of procedural and substantive law, distribution of responsibility, etc. However, certain successes in the international legal regulation of issues related to biotechnologies have been achieved thanks to numerous international forums. A number of documents in this area have been developed and signed, in particular: • The Convention on Biological Diversity (United Nations, 1992);

International Legal Challenges to Biotechnological Products

• The Nagoya Protocol (United Nations, 2010a); • The FAO Commission on Genetic Resources for Food and Agriculture; • The UNESCO International Bioethics Committee; • The WHO’s Expert Advisory Committee on Developing Global Standards for Governance and Oversight of Human Genome Editing; • The Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (World Intellectual Property Organization (WIPO), 1977); • The Cartagena Protocol on Biosafety (Secretariat of the Convention on Biological Diversity, 2000); • The Nagoya-Kuala Lumpur Additional Protocol on Liability and Compensation (United Nations, 2010b). Acknowledgments The research is carried out with the financial support of the Russian Academy of Sciences in the framework of the scientific project № 20-18-00314 “Transformation of public relations in the context of Industry 4.0: legal prevention”.

References Abashidze, A. K., Inshakova, A. O., Solntsev, A. M., & Gugunskiy, D. A. (2021). Socio-economic inequality as a barrier on the path of sustainable development: “Institutional traps” and perspectives of overcoming them. International Journal of Sociology and Social Policy, 41(1–2), 62–75. https://doi.org/10.1108/IJSSP-032020-0069 Carroll, D., & Charo, R. A. (2015). The societal opportunities and challenges of genome editing. Genome Biology, 16, 242. https:// doi.org/10.1186/s13059-015-0812-0 Dederer, H. G., & Herdegen, M. (2017). Internationales Biotechnologierecht. C.F. Müller Verlag. Greely, H. T. (2016, January 19). Are we ready for genetically modified animals? World Economic Forum. Accessed January 15, 2022, from https://www.weforum.org/agenda/2016/01/are-we-ready-for-geneti cally-modified-animals/.

149 Matytsin, D. E. (2021). Retail investment financing via remote digital computer algorithm. Legal Concept, 20(2), 150–158. https://doi.org/ 10.15688/lc.jvolsu.2021.2.20 Schmid, R., & Schmidt-Dannert, C. (2009). Biotechnology: An illustrated primer. Wiley-VCH. Sears, M., & Wolt, J. D. (2012). Ecological considerations in biotechnology: Ecological concerns and environmental risks of transgenic crops. In J. S. Popp, M. M. Jahn, M. D. Matlock, & N. P. Kemper (Eds.), The role of biotechnology in a sustainable food supply (pp. 142–143). Cambridge University Press. https://doi.org/10. 1017/CBO9781139026710.009 Secretariat of the Convention on Biological Diversity. (2000). Cartagena protocol on biosafety to the convention on biological diversity: Text and annexes, Montreal, Canada. Accessed January 15, 2022, from https://www.cbd.int/doc/legal/cartagena-protocol-en.pdf. United Nations. (1972). Stockholm declaration (adopted by the United Nations conference on the human environment, June 16, 1972). Stockholm, Sweden. Accessed January 15, 2022, from https:// wedocs.unep.org/bitstream/handle/20.500.11822/29567/ ELGP1StockD.pdf?sequence=1&isAllowed=y. United Nations. (1992). Convention on biological diversity (treaty series) (June 5, 1992). Rio De Janeiro, Brazil. Accessed January 15, 2022, from https://treaties.un.org/doc/Publication/CN/1996/CN. 29.1996-Eng.pdf. United Nations. (2010a). The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity (adopted October 10, 2010), Nagoya, Japan. Accessed January 15, 2022, from https://treaties.un.org/doc/source/docs/UNEP_ CBD_COP_DEC_X_1-E.pdf. United Nations. (2010b). The Nagoya-Kuala Lumpur supplementary protocol on liability and redress to the Cartagena protocol on biosafety (adopted October 15, 2010), Nagoya, Japan. Accessed January 15, 2022, from https://treaties.un.org/doc/source/docs/ UNEP_CBD_BS_COP_MOP_5_17-E.pdf. World Intellectual Property Organization (WIPO). (1977). The Budapest treaty on the international recognition of the deposit of microorganisms for the purposes of patent procedure (signed April 28, 1977). Budapest, Hungary. Accessed January 15, 2022, from https://www.wipo.int/treaties/en/registration/budapest/. World Trade Organization (WTO). (1995). The agreement on the application of sanitary and phytosanitary measures. Accessed January 15, 2022, from https://www.wto.org/english/tratop_e/sps_e/spsagr_ e.htm.

Problems and Prospects for the Use of Electronic (Digital) Evidence in Arbitration Proceedings Daria S. Proskurina

Abstract

In the era of comprehensive digital changes, electronic evidence has become an integral part of arbitration proceedings, often acting as the only possible means of proof. The practice of considering electronic evidence in Russia is a chaotic mass of discussions and decisions of law enforcement agencies, which are largely contradictory. To create a model of arbitration proceedings that will meet the existing realities of transforming society, it is necessary to conduct a study of the practice of considering electronic evidence by judicial authorities to disclose their legal nature, identify their relationship with related legal categories, establish the main types, and formulate proposals aimed at improving current procedural law. The main means and methods for achieving the goal are the study of the features of electronic evidence and their differences from material and written evidence in the arbitration process, as well as the study of law enforcement practice in relation to the most common types of electronic evidence using methods of abstraction, a systemic approach, concretization, analogy, legal forecasting, and the formal-legal method. The paper raises the problems of obsolescence of the contemporary legislative framework and law enforcement practice in relation to the study and taking into account electronic evidence. The practice of the admissibility and reliability of such electronic evidence as a screenshot and an archived copy of the website and electronic correspondence is analyzed. A comparative analysis of the category of electronic evidence with the categories of material and written evidence is carried out. Based on the research, the author formulated the main distinguishing features of electronic evidence. Trends in law enforcement practice are identified regarding the admissibility of screenshots and archived copies of websites and electronic correspondence as separate types D. S. Proskurina (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

of electronic evidence in arbitration proceedings. The study of the practice of consideration of electronic evidence by arbitration courts revealed the lack of uniformity in the approach to the consideration of electronic evidence by law enforcers. Legislative proposals aimed at modernizing the system of procedural legal relations with respect to electronic evidence are being formed. Keywords

Electronic evidence · Arbitration proceedings · Archival copies · Electronic correspondence · Screenshot · Admissibility · Reliability

JEL Codes

K15 · K41 · K24 · K40 · K42

1

Introduction

The widespread digitalization and the comprehensive development of telecommunication technologies lead to the creation and accumulation of a wide range of information in digital form. The most logical consequence of this process is the need to modernize the existing procedural legal regulation, considering the requirements of the information society. Evidence law, as well as other components of the Russian legal system, has been influenced by digital changes. Often, due to the conservative nature of law enforcement, the use of innovative evidence in the arbitration process is met by law enforcers with hostility. The current body of laws in the field of procedural means of proof does not regulate specific requirements for the definition of electronic evidence. The rules of proof that have existed for many years are applied equally to traditional types of evidence and electronic evidence, which, in many respects,

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_27

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creates contradictions in the rapidly developing social relations with the practice of law enforcement. Such aspects of the arbitration process as storage, collection, evaluation, comprehensive consideration, and acceptance by the court of electronic evidence cause difficulty, which may lead to the impossibility of making a fair judgment, which will be based on electronic evidence. This study is necessary because arbitration courts currently face difficulties in the issues of authentication of electronic evidence due to the dynamic nature of their content and susceptibility to up-to-the-minute changes. The research aims to develop basic approaches to the consideration of electronic evidence in the Russian arbitration process and proposals for changing the mechanism of legal regulation regarding the admissibility of electronic evidence in the arbitration system. The research objectives are to consider existing approaches to understanding electronic evidence, differentiate electronic evidence, identify their distinctive features compared with related procedural categories, consider the practice of admissibility by courts of such electronic evidence as electronic correspondence, a screenshot, and an archived copy of the site, and formulate proposals for improving the current legislation in the specified area.

2

Materials and Methods

The issues of studying the problems and prospects for the use of electronic evidence in the arbitration process were dealt with by such legal scholars as Saveliev (2016), Molchanov (1997), Vershinin (2000), Nakhova (2018), Bonner (2015), and Reshetnikova et al. (2006). Moreover, there are more indepth studies on this issue, the main idea of which is the digitalization of the judicial system in foreign legal systems, as well as in the field of international commercial arbitration, which can be traced in the works of Rusakova and Frolova (2022), Rusakova et al. (2021), A. O. Inshakova (Rusakova et al., 2021), Kupchina (2021), and others. The goals and objectives set in the work determine the choice of research methods. The methods of modeling, analogy, abstraction, and concretization allow constructing and recreating the image of how electronic evidence is examined by arbitration courts in contemporary law enforcement practice. Moreover, these methods allow identifying patterns in the conclusions of the judiciary in the process of law enforcement. The method of a systemic approach allows exploring the features of electronic evidence that distinguish them from physical and written evidence and establishing those factors that directly demonstrate the impossibility of “merging” the category of electronic evidence with other means of proof, which necessitates the emergence of the latest legal regulation in this area.

The formal legal method and the method of legal forecasting allow us, considering the peculiarities of the legal nature of the category of electronic evidence, to identify the most problematic types of electronic evidence in terms of their admissibility in the arbitration process, as well as to recreate the prospects for the behavior of judicial practice from the standpoint of studying newly emerging and growing types of electronic evidence.

3

Results

3.1

Electronic Evidence: A Form of Traditional Evidence or an Independent Means of Proof

To date, in legal science, the discussion about the procedural nature and status of electronic evidence has not ceased. By and large, all existing positions can be reduced to two main ones. On the one hand, electronic evidence can be considered only as a form of written evidence. On the other hand, it is impossible to deny that the features of their procedural status and the study of this kind of evidence by judicial authorities cannot be currently limited to one form alone. Standing apart is the position that electronic evidence is a way of fixing physical evidence. When investigating this issue, it is necessary to pay fundamental attention to the difference between the category of electronic evidence and the already established traditional means of proof (mainly written and physical evidence) that exist in the arbitration process. Guided by the norms of Chapter “The Role of Blockchain in Public Administration in the Field of Economic Activity” of the Arbitration Procedure Code of the Russian Federation (APC RF) “Evidence and proof” – evidence in the case is the information received about the facts, on the basis of which the arbitration court establishes the presence or absence of circumstances justifying the claims and objections of the persons participating in the case, as well as other circumstances that are important for the correct consideration of the case (Chapter “Social Entrepreneurship as an Institute of Sustainable Development Risk Management” of the APC RF). Moreover, this rule also provides for specific traditional types of evidence, including written and physical evidence, explanations of persons participating in the case, expert opinions, expert advice, witness statements, audio and video recordings, and other documents and materials. The analysis of the norms of Chapter “The Role of Blockchain in Public Administration in the Field of Economic Activity” of the APC RF suggests the conclusion that the legislator deliberately abandoned the legal regulation

Problems and Prospects for the Use of Electronic (Digital) Evidence in Arbitration. . .

of the concept of “electronic evidence,” perceiving this category as a form of providing written evidence. This conclusion follows from the analysis of part 3 of Article 75 of the APC RF, according to which documents received by facsimile, electronic, or other communication, including using the Internet information and telecommunication network, as well as documents signed with an electronic signature, are allowed as written evidence in the cases and in the manner provided for by the Arbitration Procedure Code of the Russian Federation, other federal laws, and other regulatory legal acts or an agreement. In addition to the apparent attribution of electronic evidence to written evidence, with this provision, the legislator also declares an additional requirement for the admissibility of electronic evidence in the form of “the presence of a special provision authorizing their use either in the norms of legislation or in an agreement concluded between the parties” (Saveliev, 2016). The position on considering electronic evidence as a form of written evidence is not new, which is confirmed by some of the most common doctrinal opinions. Representatives of the most conservative approach believe that written information presented using electronic computing equipment can be considered exclusively written evidence if such information has legal force and is expressed in the correct details (Molchanov, 1997). Supporters of this position are also guided by the opinion that, in its legal essence, electronic evidence is written evidence because its content, regardless of form, always includes the result of human thoughts in the form of certain judgments, concepts, and conclusions regarding objectively existing reality (Vershinin, 2000). One cannot deny the fact that electronic evidence expresses the results of human mental activity. However, in the age of computerization of human existence, it is necessary to realize that many public relations have switched to digital format (Inshakova et al., 2021). In this regard, new algorithms and forms of expression of subjective human inferences and thought processes have already arisen and are actively developing. Do not forget about electronic evidence that takes place exclusively in digital format. Such evidence can include files stored on the servers of hosting providers, e-mail correspondence data, including screenshots, e-mail delivery status reports, and Internet archives (Nakhova, 2018). In connection with these factors, the author believes that in today’s conditions, it is at least unreasonable to classify electronic evidence in the category of written evidence. In this research, the author proposes to adhere to the position of considering electronic documents as separate types of documents. In particular, the method of creating an electronic document is strikingly different from all others. In connection with this fact, law enforcement agencies may have problems in studying documents of this kind due to

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the existence of some of them exclusively in the machinereadable form (Bonner, 2015). The specificity of electronic evidence, which distinguishes them from traditional means of proof, is associated with the peculiarities of their creation, storage, reproduction, display, modification, and destruction. Due to its nature, electronic evidence does not currently have a single legal nature because the current procedural legislation tries to bring each individual type of electronic evidence under the means of proof directly provided for by law – some of the electronic evidence is equated to written evidence, while others, the most specific types, are submitted to the arbitration court as “other documents and materials.” In the author’s opinion, since there are no provisions in the legislation that would regulate the procedure for providing, receiving, and examining such documents and materials, it is necessary to develop and consolidate a special legal regime for electronic evidence.

3.2

Screenshot as Evidence in Court

The skepticism of Russian law enforcement practice towards any kind of digital (electronic) evidence has not bypassed the so-called screenshots, which, in essence, represent information recorded using electronic computing technology from a phone or computer screen (Matytsin, 2020). This term has not yet received legal consolidation. However, in legal science, there is already a discussion about the procedural status of this means of proof. In the doctrine, the position is widespread that a paper copy of a page from the Internet is a fixation of material evidence by examining it and drawing up a protocol (Reshetnikova et al., 2006). This point of view is shared by A. T Bonner, who qualifies Internet websites as specific material evidence (Bonner, 2015). Nowadays, the judicial practice has formed its own concept of a screenshot as “an Internet page (a screenshot showing what the user sees on the monitor) confirming the placement of information to be disclosed” (Arbitration Court of the Volga-Vyatka District, 2011). However, the practice of consideration of this type of evidence currently allows us to conclude that they have their own specifics. In April 2019, the Plenum of the Supreme Court of Russia issued a Resolution (Plenum of the Supreme Court of the Russian Federation, 2019) that is significant for Russian civil lawyers, effectively regulating the possibility of using screenshots as a separate type of evidence in disputes over violation of exclusive rights to intellectual property (Resolution of the Plenum of the Supreme Court of the Russian Federation dated April 23, 2019 No. 10). In paragraph 55 of this Resolution, the Plenum declares that the law does not establish a list of admissible evidence on the basis of which the fact of a violation is established. Therefore, when

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resolving the question of whether such a fact took place, the court, by virtue of Articles 64 and 68 of the Arbitration Procedure Code of the Russian Federation, has the right to accept any means of proof provided for by procedural legislation, including those obtained using information and telecommunication networks, in particular the Internet (Plenum of the Supreme Court of the Russian Federation, 2019). However, the recognition of a screenshot as possible evidence does not mean the need to recognize it as reliable. Prior to the release of the previously mentioned Resolution of the Plenum, the judicial practice evolved in such a way that the consideration of screenshots as the evidence required the authentication of its content by notarization. However, situations often arose when the defendant challenged the notarized screenshot if he or she was not notified about the provision of evidence. Considering the specifics of this type of electronic evidence, this practice cannot be called justified and meets the interests of the bona fide party to the dispute because, at the time of the notarization of the screenshot, the plaintiff may not know the person who is the proper defendant in the case. However, this feature was also considered by the Plenum of the Supreme Court of the Russian Federation, which, in its Resolution No. 10 dated April 23, 2019, confirmed the admissibility as evidence in the arbitration process of screenshots certified by persons participating in the case on their own, provided that all details necessary for examining the evidence are indicated, including the date the screenshot was taken and the name of the website. The compliance with these actions will affect the admissibility of such evidence, and they will be assessed by the court in accordance with Article 71 of the Arbitration Procedure Code of the Russian Federation, along with other evidence. Significant for the Russian law enforcement practice in this matter was the dispute between the sites for placing ads “Avito” and “Our Vito” on the termination of the illegal use of the intellectual property and the recovery of compensation. The evidence base of this case consisted entirely of electronic evidence; in particular, screenshots of the plaintiff’s and defendant’s websites were presented to the court, with the help of which similar website names were recorded, as well as the date and time when the screenshot was taken. The court was also provided with a notarized result of issuing an Internet search service, which confirmed the confusing similarity between the defendant’s domain name and the plaintiff’s registered trademark. When considering this dispute, the court recognized the indicated electronic evidence as admissible (Sazonova, 2020). Representatives of the most liberal trend in legal doctrine attribute a screenshot to the concept of electronic evidence because the very fact of the appearance, functioning, and their development is most associated with scientific and technological progress (Boriskina, 2020). It is necessary to

D. S. Proskurina

agree with the position that an ordinary paper copy of a screenshot cannot fully meet the requirements of admissibility and reliability. Simultaneously, the protocol of viewing Internet pages is often the only evidence for a person who has applied for judicial protection of violated rights and legally protected interests (Arbitration Court of the Volga-Vyatka District, 2019). Thus, a judicial practice currently recognizes the possibility of making decisions based on an evidence base consisting of properly certified screenshots. Simultaneously, proper certification can now be understood not only as notarial actions but also as independent actions of the party presenting the screenshot as evidence in the case. However, the uniformity of decisions on the admissibility of screenshots, duly certified by the persons participating in the case, is currently absent, which is a problem for making a fair judgment.

3.3

E-Mails as Evidence in Court

For a long time, the Russian judicial practice of considering electronic messages as admissible evidence has been reduced to the conclusion that it is necessary to provide for a clause stipulated by the agreement of the parties on the recognition of legally significant messages of the parties sent by e-mail when considering certain disputes related to the subject of such an agreement. This thesis is confirmed by the Ruling of the Supreme Court of the Russian Federation in case No. A56–74462/ 2016. During the consideration of the case, the defendant pointed out that it was inadmissible for the court to consider electronic correspondence as admissible evidence in accordance with the procedural legislation. However, the court did not take this argument into account because “it was established that the e-mail addresses belong to the parties, and in the terms of the supply agreement there is a clause on whether legally significant messages can be sent by e-mail” (Supreme Court of the Russian Federation, 2017). In other words, e-mail correspondence will be admissible evidence if there is a clause in the contract indicating the e-mail addresses and details of the parties to exchange information regarding existing legal relations (Arbitration Court of the City of Moscow, 2019). This practice is problematic from the point of view of protecting the interests of the parties to legal relations in which the communication of counterparties can occur through the exchange of electronic documents and messages by e-mail. Paragraph 3 of Article 74 of the Arbitration Procedure Code of the Russian Federation testifies to the restrictions on the use of electronic documents because their admissibility implies fixing the conditions for their validity in a paper contract between the parties. It is thought that this practice is

Problems and Prospects for the Use of Electronic (Digital) Evidence in Arbitration. . .

paradoxical in terms of the fact that the establishment of such imperatives creates conditions for dishonest behavior on the part of counterparties under the contract, who could conduct electronic negotiations on the conclusion of the contract but did not fix the clause on the possibility of using electronic correspondence as evidence. It should be noted that judicial practice on this issue is not unequivocal, and there are cases of accepting electronic correspondence as admissible evidence, despite the absence of reference to it in the agreement of the parties to the dispute. The court is also entitled to draw attention to other circumstances that could indicate an agreement between the parties on the use of electronic messages in their relationship (Saveliev, 2016). Thus, by the Decree of the Arbitration Court of the VolgaVyatka District in case A11-3596/2018, a decision was made that recognized the exchange of electronic messages between the parties as a custom, and the mandatory fixing in the contract was recognized by the court as not mandatory for qualifying such actions as legally significant (Arbitration Court of the Volga-Vyatka District, 2019). Today, the judicial practice has no uniform approach to the issue under consideration. Legal positions are divided into two main opposing conclusions. On the one hand, electronic correspondence can be recognized as evidence only if it is fixed as such in the contract. On the other hand, electronic correspondence is nothing more than a civil law custom in the understanding of paragraph 1 of Article 5 of the Civil Code of the Russian Federation and can be considered as electronic evidence without special consolidation. Moreover, the court may establish that the correspondence by e-mail within the framework of the contract was two-way; respectively, one or another party performed conclusive actions that testified to the approval of the choice of e-mail as a method of exchanging information (Ninth Arbitration Court of Appeal, 2017). It should be noted that the practice of consideration by the courts of electronic correspondence does not always involve the study of it in material form, as, for example, happened in the case considered by the Arbitration Court of the Irkutsk Region, where the court, at the request of the party, simply examined the electronic mailbox in the court session, finding significant for the consideration of the case letters (Arbitration Court of the Irkutsk Region, 2017). The practice of examining evidence in the form of electronic correspondence is ambiguous and needs to legally consolidate the possibility of examining this kind of evidence without indicating this fact by the parties in the contract because such an imperative limits the possibility of a fair decision by the court in the case.

3.4

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Archival Copies of Websites as Evidence in Court

In judicial practice, particularly in the practice of protecting intellectual property rights, there are often cases when the defendant deletes a web page or blocks access to it. Internet pages with contentious content often contain the only evidence of infringement of the intellectual rights of plaintiffs in such disputes. If the copyright holder did not have time and did not properly record the fact of violation of exclusive rights, then the only evidence may be lost. When such situations arise, web archives are actively used as a means of proof in practice, with the help of which one can restore a copy of a website or web page to a specific date. Notably, the qualification by courts of digitally recorded Internet archives as admissible electronic evidence is a popular practice, as evidenced by the existence of relevant court decisions and legal positions (Presidium of the Intellectual Property Rights Court, 2020). In one of the disputes, which was considered in the Court for Intellectual Property Rights of the Russian Federation on the recovery of damages for infringement of the exclusive right to a patented invention, the plaintiff submitted archival copies of the pages of Internet websites for consideration by the court as evidence. The defendant disputed the admissibility of this type of evidence due to the lack of assurances about its authenticity. However, the courts of all three instances, including the Court for Intellectual Property Rights of the Russian Federation, decided on the admissibility of archival copies and protocols of mechanized inspection of information on the Internet as evidence (Intellectual Property Rights Court, 2019). The information contained in the Internet archives opens up new horizons in terms of the possibilities of proving the presence or absence of certain information on the Internet at a certain point in time. However, as soon as such “unusual” sources are used in a trial, the question of their reliability inevitably arises, which is especially emphasized by the other side. It should be noted that the skeptical attitude of the courts in this matter is characteristic not only of Russian law enforcers. For example, in the famous American case “St. Clair v. Johnny’s Oyster & Shrimp Inc.,” the judge stated the position that the reliability of any website is, in principle, a questionable category, and any digital evidence obtained on the Internet does not meet the admissibility requirements. Instead of relying on information from the Internet, the plaintiff had to hunt for evidence in paper form that meets all existing requirements (US District Court for the Southern District of Texas, 1999).

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Thus, Russian law enforcement practice is very loyal to the consideration of archival copies of websites as evidence, but the question of their reliability is often in doubt.

4

Conclusion

Based on the studied specifics of electronic evidence, the author considers it necessary to fix the legal definition of this category directly in the APC of the Russian Federation. Electronic evidence can be understood as information expressed in electronic form or information located on special media, which require special software to view, and file transfer is possible using a telecommunications network. With regard to the study of the admissibility of screenshots as electronic evidence in court, the author considers it reasonable to legally fix in the current APC of the Russian Federation the possibility of self-certification of screenshots by persons participating in the case to provide them as electronic evidence in arbitration disputes. The possibility of providing properly certified screenshots by the participants in the process must be implemented in electronic (digital) form and in the form of paper media. Regarding the practice of admissibility of electronic messages as evidence in the arbitration process, the author considers it necessary to legally fix the possibility of considering electronic correspondence as evidence by the court, both in electronic and in paper form, without the prior agreement of the parties. This decision is due to the transformation of the practice of exchanging electronic messages by the parties of contractual legal relations into a custom widely used in the field of entrepreneurial activity. From the legislator’s point of view, the most relevant decision regarding the consideration by the courts of archival copies of Internet websites is the creation of a state or stateaccredited service for obtaining reliable archival copies of sites for use as electronic evidence by parties to arbitration disputes. Acknowledgments The work was supported by the RUDN University Scientific Projects Grant System, project No. 090222-2-000 “Development of the concept and models of digital dispute resolution in the context of creating a common information area of Eurasian Economic Union countries” (Supervisor: Frolova E.E.).

References Arbitration Court of the City of Moscow. (2019). Decision in case No. A40-130107/2019 dated October 11, 2019. Moscow, Russia. Accessed December 28, 2021, from https://sudact.ru/arbitral/doc/ edV67TDZXPYa/. Arbitration Court of the Irkutsk Region. (2017). Decision in case No. A19-2500/2017 dated August 17, 2017. Irkutsk, Russia.

Accessed December 28, 2021, from https://sudact.ru/arbitral/doc/ nhCkTLYh40gX/. Arbitration Court of the Volga-Vyatka District. (2011). Resolution in case No. A82-12456/2010 dated April 27, 2011. Nizhny Novgorod, Russia. Accessed December 28, 2021, from http://www.consultant. ru/cons/cgi/online.cgi?req=doc&base=AVV&n= 43710#bcqEEzSuONhYF67v1. Arbitration Court of the Volga-Vyatka District. (2019). Resolution No. F01-7087/18 in case No. A11-3596/2018 dated February 15, 2019. Nizhny Novgorod, Russia. Accessed December 28, 2021, from http://www.consultant.ru/cons/cgi/online.cgi?req= doc&base=AVV&n=86971#ByAcIzSPpH85JRZ4. Bonner, A. T. (2015). Traditional and non-traditional means of proof in civil and arbitration proceedings. Prospect. Boriskina, N. I. (2020). Procedural form of evidence in modern civil proceedings (Dissertation of candidate of legal Sciences). Russia, Moscow: Lomonosov Moscow State University. Inshakova, A. O., Baltutite, I. V., & Kochetkova, S. Y. (2021). Electronic and digital tools for neo-industrialization in the contract relations arising from public procurement of economic entities of the EAEU countries. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 1439–1448). Springer. https://doi.org/10.1007/978-3-03056433-9_149 Intellectual Property Rights Court. (2019). Resolution No. C 01-303-2017 in case No. A 70-9233/2016 dated March 14, 2019. Moscow, Russia. Accessed December 28, 2021, from http://www. consultant.ru/cons/cgi/online.cgi?req=doc&base=SIP&n= 47727#SssaIzSJPzRGcmkA. Kupchina, E. V. (2021). Legal regulation of the provision of digital evidence in international commercial arbitration. Proceedings of the Institute of State and Law of the Russian Academy of Sciences, 16(3), 89–111. https://doi.org/10.35427/2073-4522-2021-16-3-kupchina Matytsin, D. E. (2020). Neoindustrial toolkit of circulation of uncertified securities: Digital technologies of realization and protection of rights of investors and issuers. Legal Concept, 19(3), 73–83. https://doi. org/10.15688/lc.jvolsu.2020.3.10 Molchanov, V. V. (1997). Proof and evidence. Gorodets. Nakhova, E. A. (2018). The problems of using electronic evidence in civil litigation and administrative law proceedings. Stat, 4, 81–90. Ninth Arbitration Court of Appeal. (2017). Resolution in case No. A40-237591/2016 dated October 31, 2017. Moscow, Russia. Accessed December 28, 2021, from http://www.consultant.ru/cons/ cgi/online.cgi?req=doc&base=MARB&n= 1331663#ZK8YIzSs7w2rCjX81. Plenum of the Supreme Court of the Russian Federation. (2019). Resolution “on the application of part four of the civil code of The Russian Federation” (April 23, 2019 No. 10). Moscow, Russia. Accessed December 28, 2021, from http://www.consultant.ru/ document/cons_doc_LAW_323470/. Presidium of the Intellectual Property Rights Court. (2020). Resolution No. 01-952/2020 in case No. SIP-976/2019/ dated September 28, 2020. Moscow, Russia. Accessed December 28, 2021, from http://www.consultant.ru/cons/cgi/online.cgi?req=doc&base= SIP&n=67555#moWaIzSknpErLGmz. Reshetnikova, A. V., Semyonova, E. A., & Tsaregorodtseva. (2006). Comments on judicial errors in the practice of applying the arbitration procedural code of The Russian Federation. Norma. Rusakova, E. P., & Frolova, E. E. (2022). Introduction of digital methods of protection of rights as a legal guarantee of business activity in the modern world (on the example of China). In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 121–130). Springer. https://doi.org/10.1007/978-981-16-46218_10

Problems and Prospects for the Use of Electronic (Digital) Evidence in Arbitration. . . Rusakova, E. P., Frolova, E. E., & Inshakova, A. O. (2021). Legal regulation of internet courts in China. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 1515–1521). Springer. https://doi.org/10.1007/978-3-030-69415-9_167 Saveliev, A. I. (2016). Electronic commerce in Russia and abroad: Legal regulation (2nd ed.). Statut. Sazonova, M. (2020, October 26). Electronic evidence in intellectual property disputes. Accessed December 28, 2021, from https://www. garant.ru/news/1418353/. Supreme Court of the Russian Federation. (2017). Court ruling No. 307-ES17–9008 in case No. A56–74462/2016 dated August

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1, 2017. Moscow, Russia. Accessed December 28, 2021, from http://www.consultant.ru/cons/cgi/online.cgi?req=doc&base= ARB&n=508216#p8KOIzSu67q8T6zL1. US District Court for the Southern District of Texas. (1999). Case teddy St. Clair v. Johnny’s Oyster & Shrimp, Inc. (December 17, 1999 No. Civ.A. G-99-594). Houston, Texas. Accessed December 28, 2021, from https://law.justia.com/cases/federal/district-courts/ FSupp2/76/773/2370358/. Vershinin, A. P. (2000). Electronic document: Legal form and evidence in court. Gorodets.

New Forms of Dispute Resolution in the Russian Federation as a Reflection of Innovation in Law Enforcement: Platform Justice Elena P. Ermakova

and Zarina K. Erbutaeva

Abstract

1

“Platform justice” is a new approach to online dispute resolution. Another name for this phenomenon is the decentralized justice industry. The authors determined that the term “decentralized justice” should be translated into Russian as “platform justice,” which more accurately reflects the essence of this concept. Moreover, a similar term, “platform law” (in the field of investment law), has already been used by Russian scientists S. Yu. Kashkin, A. V. Altukhov, and N. A. Senzhova. Considering the classification of AI systems, platform justice can be divided into first-level platforms and second-level platforms. The first-level platforms are platforms that perform only part of the procedural actions to resolve disputes (e.g., collecting evidence, executing court decisions, collecting national laws and regulations, etc.). The second-level platforms are platforms that allow resolving a dispute completely online (e.g., Kleros and Aragon, Taobao (PRC), etc.). Depending on the platform’s founder, they can be divided into public platforms and private platforms.

Smart contracts also have limitations: they cannot independently check the quality of the goods, find out whether the service was well rendered, whether the counterparty is acting in good faith, etc. (Rusakova et al., 2021b; Szabo, 1996). In addition to the appearance of a new type of contract, we can observe a boom in online retail. For example, more than a billion purchase and sale transactions are concluded monthly on retail platforms “eBay” (USA), “Amazon” (USA), and “Taobao” (China). As of March 2021, “Taobao Marketplace” (Alibaba Group) reached 792 million active users per month, ranking first among Chinese and global e-commerce platforms. According to a report by Professor Ethan Katsch at the ODR Forum 2019, eBay resolves more than 60 million disputes per year; in 90% of cases, without human intervention (Loebl, 2019). The above leads us to the idea that new forms of dispute resolution are needed, which can become online platforms based on AI technologies, to settle small domestic and transnational disputes.

Keywords

Dispute resolution · Platform justice · Decentralized justice · Platform law · Litigation

JEL Codes

K24 · K41 · K49

2

Introduction

Materials and Method

The features and prospects of the formation of platform justice are studied in the works of Aouidef et al. (2021), Burnov (2021), Ermakova and Frolova (2022), Ermakova et al. (2020), Kashkin et al. (2021), Loebl (2019), Matytsin (2021), Rusakova (2020), Rusakova et al. (2021b), Savage (2020), Shi et al. (2021), Szabo (1996), Zasemkova (2020), Zou (2020).

E. P. Ermakova (✉) · Z. K. Erbutaeva Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; [email protected] # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_28

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3

Results

3.1

About Platform Justice

We studied the concept of the French scientists of the University of Paris II—Aouidef et al. (2021). We believe that the term “decentralized justice” should be translated into Russian as “platform justice,” which more accurately reflects the essence of this concept. Moreover, a similar term, “platform law” (in the field of investment law), has already been used by Russian scientists Kashkin et al. (2021). French scientists consider three projects that play an innovative role in platform justice: “Kleros,” “Aragon,” and “Jur.” However, the “Jur” platform is not yet operational (Matytsin, 2021). The Kleros platform was founded by F. Astom and K. Lesage in May 2017 (Kleros, n.d.). The jury was paid about $123,000 in the form of arbitration fees (Aouidef et al., 2021). The Aragon platform “Aragon Court” is a Web3 plugin arbitration platform available via API for any decentralized application (DApp) but fully implemented in “Aragon OpenStack” (Aragon, n.d.). The platform includes a “Protocol of decentralized dispute resolution.” The platform court has 239 jurors but does not inform about the number of resolved disputes. After a dispute arises, seven days are provided for the presentation of evidence, which will be later considered by a jury. During this period, the creator of the dispute may also decide to close the presentation of evidence at any time. The proofs can be presented in text format, but HTTP and IPFS links are also accepted. The dispute is considered by five judges of the “first instance,” randomly selected from among the persons who expressed a desire to act as such. The decision is made by a majority vote based on the materials submitted by the parties and the Aragon Network Jurisprudence rules. The platform also allows appealing decisions (Zasemkova, 2020).

3.2

Experience of the State Courts of the PRC

Chinese lawyers claim that China is flooded with online judicial platforms. There are public and private platforms, national databases and local indexes, websites for scientists, and websites for lawyers. Only the Supreme People’s Court of China has three online platforms. The first platform, “China Judgments Online,” is mainly used to publish and compile court documents. The second—“Faxin.cn”— focuses on analyzing court cases and related issues. The third is the ‘One-Stop” platform, a diversified platform for resolving international commercial disputes. In 2019, the “National e-evidence platform” was created, which includes

the courts of 22 provinces of China (Rusakova, 2020; Shi et al., 2021). Additionally, Chinese courts have created four publicly accessible (public) platforms for providing judicial information to parties and the public via the Internet: 1. An online System for Monitoring Court Decisions and Law Enforcement Control (Online Enforcement Query and Control System); 2. Credit and disciplinary mechanism against unscrupulous debtors by court decision (Credit disciplinary mechanism against dishonest judgment debtors); 3. Online judicial auction of property subject to enforcement proceedings (Online judicial auction of the property subject to execution); 4. National Enforcement management system (National court enforcement case process management system). Other platforms include: “Intelligent trial support system” (Rusakova et al., 2021a); “Trial speech recognition system”; Automated “Filing system” (case pushing system); “Information platform for processing cases for parole” (Digitalized case handling platform for commutation); 5. “Platform for “online data integration for the resolution of road traffic disputes.” 1. 2. 3. 4.

In 2019, the “National e-evidence platform” was also created in China, based on blockchain technology, uniting courts in 22 provinces and municipalities of China (Zou, 2020).

3.3

Categories of Platform Justice: Strong and Weak (Partial) Levels of Platforms

The AI systems are a robot judge, a robot arbitrator, and a robot mediator (Ermakova & Frolova, 2022). Considering the classification of AI systems, platform justice can also be divided into first-level platforms and second-level platforms. The first-level platforms are platforms that perform only part of the procedural actions to resolve disputes (e.g., collecting evidence, executing court decisions, collecting national laws and regulations, etc.). Second-level platforms are platforms that allow resolving disputes completely online (e.g., Internet platforms for litigation in Hangzhou, Beijing, and Guangzhou (PRC), private platforms Kleros and Aragon, Taobao (PRC), etc.). It should be noted that the secondlevel platforms use the first-level platforms, for example,

New Forms of Dispute Resolution in the Russian Federation as a Reflection of. . .

the National Electronic Evidence Platform (PRC), the Speech Recognition System (PRC), etc. Depending on the platform’s founder, they can be divided into public platforms and private platforms. By industry, platforms can be divided into platforms in the field of systematization of legal norms, platforms in the field of collecting court decisions, platforms in the field of evidence, platforms in the system of execution of court decisions, platforms in the field of filing court cases etc.

3.4

New Laws of Russia 2021: The Use of Digital Technologies in Russian Courts

The Law on Digital Transformation of Enforcement Proceedings To implement the super service “Digital Enforcement Proceedings” (Russian Federation, 2021a, 2021b), the possibility of automatic decision-making on certain issues of enforcement proceedings (a bailiff robot) is being established. These issues include initiation, refusal to initiate, and termination of enforcement proceedings; a collection of enforcement fees; establishment and cancellation of restrictions, prohibitions, imposition, and removal of seizures, and other decisions. Simultaneously, it should be noted that such a regime will only apply to unconditional decisions that do not require the personal participation of a bailiff. Automatic decision-making will allow promptly preparing FBS resolutions and sending them to the parties of enforcement proceedings; control will be provided with the possibility of appealing in court and in the order of subordination. Unified Superservice: “Justice Online” Platform The development of electronic information storage and exchange systems requires the improvement of relevant search engines, as well as the use of AI technology for the analysis of judicial practice. To this end, the Russian judicial system has decided to develop a single super service—the “Justice Online” platform. The platform is expected to combine the functionality for the exchange of documents between courts, data storage, the use of cloud technologies, and provide an opportunity to form “electronic files,” including for remote familiarization of the parties with materials (Burnov, 2021). The super service will include the following: 1. 2. 3. 4.

Remote appeal to the court in electronic form; Court notices; Remote access to electronic case materials; Receipt of judicial acts or their copies in electronic form;

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5. Remote participation in court sessions using web conference technology, etc. Additionally, the super service will have built-in auxiliary elements with which it will be possible to determine the jurisdiction of the case and calculate and pay the state fee; an “interactive assistant” will be created that will be able to answer frequently asked questions and help with navigation through the service. The super service will be integrated with other information systems, including a cloud-based digital platform for providing state (municipal) services, a digital profile, and a National Data Management System. The creation of this super service will allow transferring electronic justice to a qualitatively new level. The launch of “Justice Online” is planned for 2024. However, some of its components, such as the service for determining territorial jurisdiction, the classifier of claims, and the service for calculating state fees, will be tested as soon as they are ready. In 2022, it is planned to provide the possibility of remote participation in trials.

4

Conclusion

We believe that the active implementation of platform justice will be the main trend in 2022 worldwide and in Russia. On December 21, 2021, the President of Russia signed the law on digital enforcement proceedings (No. 417-FZ), on the basis of which the “Digital Enforcement Proceedings” super service will be created, providing for the possibility of automatic decision-making on certain issues of enforcement proceedings (Robot Bailiff). On December 30, 2021, the President signed another law—on online attendance at court sessions with identification through the public services portal. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project No. 090222-2-000 “Development of the concept and models of digital dispute resolution in the context of creating a common information area of Eurasian Economic Union countries” (Supervisor: Frolova E.E.).

References Aouidef, Y., Ast, F., & Deffains, B. (2021, March 16). Decentralized justice: A comparative analysis of blockchain online dispute resolution projects. Frontiers in Blockchain, 4, 564551. https://doi.org/10. 3389/fbloc.2021.564551 Aragon. (n.d.). Official website. Accessed December 22, 2021, from https://aragon.org/. Burnov, V. (2021, May 26). The justice online superservice will appear in Russia, by 2024 – Momotov. RAPSI – Russian Legal Information Agency. Accessed December 22, 2021, from http://rapsinews.ru/ judicial_news/20210526/307080402.html. Ermakova, E., & Frolova, E. (2022). Using artificial intelligence in dispute resolution. In A. O. Inshakova & E. E. Frolova (Eds.),

162 Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 131–142). Springer. https://doi.org/10.1007/978981-16-4621-8_11 Ermakova, E. P., Frolova, E. E., & Sitkareva, E. V. (2020). New trends in developing alternative ways to resolve financial disputes. Journal of Politics and Law, 13(3), 280–286. https://doi.org/10.5539/jpl. v13n3p280 Kashkin, S., Altukhov, A., & Senzhova, N. (2021). Platform law as a tool of innovative investment platforms (crowdfunding). Courier of Kutafin Moscow State Law University (MSAL), 1, 155–164. https:// doi.org/10.17803/2311-5998.2021.77.1.155-164 Kleros. (n.d.). Official website. Accessed December 22, 2021, from https://kleros.io/. Loebl, Z. (2019, December 16). Can a robojudge be fair? Kluwer Arbitration Blog. Accessed December 22, 2021, from http:// arbitrationblog.kluwerarbitration.com/2019/12/16/can-a-robojudgebe-fair/?print=print. Matytsin, D. E. (2021). Legislative novelties of regulation of investment transactions made with the use of financial platform: Evaluation of effectiveness. Legal Concept, 20(3), 125–137. https://doi.org/10. 15688/lc.jvolsu.2021.3.19 Rusakova, E. (2020). The integration of modern digital technologies to the legal proceedings of People’s Republic of China and Singapore. State and Law, 9, 102–109. https://doi.org/10.31857/ S102694520011323-6 Rusakova, E. P., Frolova, E. E., & Inshakova, A. O. (2021a). Legal regulation of internet courts in China. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 1515–1521). Springer. https://doi.org/10.1007/978-3-030-69415-9_167 Rusakova, E. P., Frolova, E. E., & Inshakova, A. O. (2021b). The procedure of mediation in the age of industry 4.0. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional

E. P. Ermakova and Z. K. Erbutaeva development vs. revolutionary leap (pp. 947–953). Springer. https:// doi.org/10.1007/978-3-030-69415-9_105 Russian Federation. (2021a). Federal law “on amendments to certain legislative acts of The Russian Federation” (December 21, 2021 No. 417-FZ). Moscow, Russia. Accessed December 31, 2021, f r o m h t t p : / / p u b l i ca t i o n . p r a v o . g o v . ru / Do c u m en t / V i ew / 0001202112210026. Russian Federation. (2021b). Federal law “on amendments to certain legislative acts of The Russian Federation” (December 30, 2021 No. 440-FZ). Moscow, Russia. Accessed December 31, 2021, f r o m h t t p : / / p u b l i ca t i o n . p r a v o . g o v . ru / Do c u m en t / V i ew / 0001202112300041. Savage, D. (2020, January 14). Thoughts for the new decade: Smart contracts, blockchain and construction dispute resolution. Thomson Reuters Prac. L. Construction Blog. Accessed December 22, 2021, from http://constructionblog.practicallaw.com/thoughts-for-thenew-decade-smart-contracts-blockchain-and-construction-disputeresolution/. Shi, C., Sourdin, T., & Li, B. (2021). The smart court – A new pathway to justice in China? International Journal for Court Administration, 12(1), 4. https://doi.org/10.36745/ijca.367 Szabo, N. (1996). Smart contracts: Building blocks for digital free markets. Extropy Journal of Transhuman Thought, 16. Accessed December 22, 2021, from https://www.fon.hum.uva.nl/rob/ Courses/InformationInSpeech/CDROM/Literature/ LOTwinterschool2006/szabo.best.vwh.net/smart_contracts_2.html. Zasemkova, O. (2020). Methods of resolving disputes arising from smart contracts. Lex Russica, 73(4), 9–20. https://doi.org/10.17803/ 1729-5920.2020.161.4.009-020 Zou, M. (2020). Virtual justice in the time of COVID-19. Accessed December 22, 2021, from https://www.law.ox.ac.uk/business-lawblog/blog/2020/03/virtual-justice-time-covid-19.

Legal Assessment of Objective and Subjective Justifiable Defense Signs Victor I. Dineka , Mikhail V. Denisenko Gorbunov , and Irina V. Veretentseva

Abstract

The paper focuses on one of the important issues, namely the application of provisions on necessary defense in judicial and investigative practice. Even though the institute of necessary defense has received significant development in the current criminal legislation; its application in judicial and investigative practice is associated with significant difficulties, especially in the qualification of what happened. In this area, gross mistakes are often made, entailing an incorrect legal assessment of the actions committed in these circumstances. Keywords

Defending person · Attacking person · Necessary defense · Threat of encroachment · Illegality of actions · Legality of actions · Proportionality of harm · Conditions of legality · Legal errors

JEL Codes

K00 · K14 · K19

V. I. Dineka Institute of Management and Law of the State University of Management, Moscow, Russia

1

, Oleg V. Popov

, Mikhail A.

Introduction

A careful analysis of the content of Article 37 of the Criminal Code of the Russian Federation allows us to distinguish four basic rules, which represent the basic legal foundation of the institute of necessary defense. For the correct assessment of this circumstance, a mandatory and primary requirement is the analysis of the subjective perception of what happened by the defender himself. The right for necessary defense against criminal encroachment belongs directly to the defending party, the victim. This rule means that the objective need to exercise the right to take measures to repel an attack is based on a subjective criterion, the formation of which occurs in a person’s mind as a result of a conscious choice to defend against an attack. It determines the further evaluation of the attack that occurred, and the legitimacy of further actions aimed at inflicting harm on the attacker depends. The assessment of the degree and nature of public danger of an assault (threat to health or life) also relates to the subjective (mental) reaction of the person who was attacked.

2

Methodology

Various methods were used in the study, mainly the methods of legal and comparative analysis. The method of legal analysis makes it possible to identify those legislative and normative legal acts in the Russian system of law, which enshrine the main legal positions governing the practical implementation of the institute of necessary defense in Russian criminal law.

M. V. Denisenko Institute of Law and National Security of RANEPA, Moscow, Russia O. V. Popov (✉) · M. A. Gorbunov Institute of Public Administration and Law of the State University of Management, Moscow, Russia I. V. Veretentseva Russian Customs Academy, Lyubertsy, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_29

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Results

Violent acts can be a wide variety but are expressed in the presence of a real threat of impending attack, in which the perpetrator aims to influence the person’s will, subordinating their behavior to the perpetrator’s demands. The very existence of the threat of an assault and the protective measures taken in the subsequent period of their legal evaluation are often recognized as unlawful, arguing that the physical attack itself did not actually occur. This is an erroneous position, the essence of which lies in the lack of the necessary theoretical and legal knowledge of the importance of the criminal threat. The legal literature repeatedly declares the claim that the threat, as such, does not actually involve active physical violence, although its public danger is expressed in a real demonstration and actual readiness to proceed to a decisive action (Gracheva & Chuchaev, 2017). Attention is drawn to the legislative definition of necessary defense (Part 1, Article 37 of the Criminal Code of the Russian Federation), where an actual attack is not necessary but may be expressed in the presence of a direct threat of violence dangerous to life, when “the attacking person is ready to proceed to the commission of the corresponding act” (Russian Federation, 1996). An example of such a situation is the provision of paragraph 2 of Article 24 of the Federal law “On the police,” where a police officer has the right to defend himself or herself with the use of lethal firearms in defense of their life (Russian Federation, 2011). This is allowed in two cases: when a person tries to approach a police officer or touch a police officer’s firearm. Under these conditions, police officers exercise their exclusive right to necessary defense because it is a probable dangerous encroachment directly aimed at their life or health (paragraph 1, Article 23). In contrast to this right, police officers are obligated by law to use firearms to protect others from a dangerous attack, which does not constitute a state of necessary defense because it indicates the presence of the officer in the performance of official duties (Paragraph 6 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 19) (Plenum of the Supreme Court of the Russian Federation, 2012). Thus, as far as police officers are concerned, the right to necessary defense is immutable when there is a threat of encroachment, or an actual attack is committed through physical impact directly on the officer. When another person is attacked, and it is necessary to protect him or her, a police officer implements the duty to apprehend the offender, in the process of which it is permissible to inflict harm on the assailant, proportionate to the degree and nature of public danger of the attack (Article 38 of the Criminal Code of the Russian Federation). Thirdly, the legitimacy of defensive actions is again based on the mental perception and assessment by the defender

himself, which is expressed in a subjective assessment of the public danger, considering which (degree and nature), the decision is made to inflict adequate and direct harm solely on the assailant. Fourth, the state of necessary defense arises as a result of a criminal encroachment, the presence of which is an incentive for the emergence of the subjective right to legitimate defense. In this case, the state of this circumstance may be of a continuous or continued nature; the right to legitimate defense is retained by the person until the end of this encroachment. The existence of such a subjective right to continuous or continued defense allows its holder to independently determine the signs of a continuing or continued encroachment, which allows an individual to take measures to protect themselves in the time interval that fits in the period between the beginning of the encroachment and its completion. Consequently, the determining factor in the legal assessment of the state of necessary defense is primarily the obligation of the law enforcement officer to establish the cumulative presence in the defender of the above subjective signs: the emergence of the right to choose defense; their subjective assessment of the degree and nature of public danger of the attack; formation and presence of confidence in the legality of defensive actions committed; making a decision to inflict proportionate harm (life, health) on the assailant. In practice, it is the other way around. The primary legal assessment is based not on the examination of the causes of the right to defense but on a focused assessment of the extent and nature of the harm inflicted on the assailant (the consequence of the defense). The doctrine of causality obligates the enforcer to analyze the initial, main cause rather than to engage in the actual fixation of the harm that occurred as an inevitable consequence of the offense committed by the perpetrator. It is cause, which is the main criterion in evaluating criminal offense, that produces an inevitable consequence, not the other way around. Formulating the concept of necessary defense and its basic characteristics, to the detriment of the paramount importance of the subjective criterion, the legislator substituted it for the need to actually establish “harm to the assailant” (paragraph 1 of Article 37 of the Criminal Code of the Russian Federation). Thus, it is of paramount importance to determine the harm to the assailant and then to determine whether the person had the right to self-defense or not. For this reason, the incorrect and erroneous legislative construction of Article 37(1) of the Criminal Code of the Russian Federation does not prioritize the subjective assessment of the occurrence of a person’s right to this defense, which is required for a person at a particular time and in the process of the occurring event. This is where the basic error lies, which allows for significant mistakes in practice, when the legitimate defense is

Legal Assessment of Objective and Subjective Justifiable Defense Signs

recognized as a crime because unjustified harm has been done to the assailant, whereas, according to the subjective perception of the defender, such harm is quite justified. In the legal assessment of the legality of the exercise of the right to necessary defense by a police officer, a criminal case is often filed for the unfounded accusation of abuse of power (Article 286 of the Criminal Code of the Russian Federation). In such cases, the legal error is that the defense is associated with the initial presence of a dangerous attack, while in the case of abuse of power, there is no such encroachment, but the representative of power, despite this, uses weapons, thereby ignoring the established legal grounds set out in the law (paragraph 1, Article 23). This occurs because the imperfection of the established legal characteristics obliges the law enforcement officer to conduct a primary assessment of the consequences, shifting to the last place the role and legal significance of the subjective assessment by the defender. The current legislative model of necessary defense, expressed in Article 37 of the Criminal Code of the Russian Federation, considers necessary defense to include only those actions that “allow the infliction of harm” and are “lawful.” With this statutory construction in mind, after determining harm and legitimacy, the degree and nature of public danger of an assault in the form of “violence threatening life or health” is established. Following the logic of the legislative construction of the considered norm, the very process of the sequence of legal analysis should consist of the mandatory primary assessment of the sign of legitimacy and its correlation with the harm caused. In this case, the subjective characteristics are ignored, although it is the subjective evaluation of the defender that is primary; the actions taken by the defender should be evaluated last. In the scientific literature, the analysis of the content of necessary defense is limited to a detailed description of objective signs, which are not difficult to detect (Avdeeva, 2019; Dorogin, 2020; Nikulenko & Smirnov, 2020). It is easy to reconstruct the picture of what happened by interviewing the defending person and finding out what actions the defending person committed (where he was, what tools and means were used in the process of protecting life and health). This approach establishes not what actually happened but what could have been. This completely overlooks the need for a mental evaluation of the victim himself. The meaning lies in the establishment of the content of intellectual and volitional signs, forming in the aggregate the necessary and decisive moment required when choosing the option of behavior: to use the legal right or abandon it (flee or seek help from other persons or appropriate authorities). In this case, it is not essential that any person has the right, “regardless of profession, official position, or special training,” not so much to decide to defend himself or herself from a socially dangerous encroachment as to be able to inflict harm on an encroacher, which has been called “proportionate” (Avdeeva,

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2019; Dorogin, 2020; Nikulenko & Smirnov, 2020). In judicial and investigative practice, instead of a subjective assessment of the degree and nature of public danger of the attack, this characteristic is often replaced by the establishment of a mandatory identity between the tools and means of attack used in the attack and defense. This is a critical legal error because the legal meaning of the requirement stated in the law obligates the law enforcement officer to assess not the tools or means used but the degree and nature of public danger of the attack, the potential threat to life or health. The definition of the content of this threat is also important since we are talking about “encroachment,” which is not understood unambiguously in criminal law. This may also be an act in progress; in another case, it corresponds to the presence of an imminent threat that has not yet turned into physical impact but has already been actually initiated and has all necessary characteristics of a completed encroachment because the right to defense arises precisely from the beginning of the encroachment. In practice, the legal assessment is often that the physical impact of the assailant—the actual assault—is mandatory.

4

Conclusion

In view of the above, it should be stated that the current legislative structure of Article 37 of the Criminal Code of the Russian Federation contains several significant erroneous provisions that require correction. In determining the conditions of legitimate defense, it is first necessary to establish not the presence of the object to be protected from attack, the presence of harm to the assailant, and the absence of signs of exceeding the limits of necessary defense, but the determination of the moment of occurrence of the subjective right to defense of the defender and its priority in determining the degree and nature of the protective measures taken. In this case, we should not attach decisive importance to objective signs: timeliness, presence (begun but not completed), correspondence of used means of defense to the severity of the attack, and the degree and nature of the harm inflicted.

References Avdeeva, E. V. (2019). Justifiable defense: Relevant issues of the legal regulation and law enforcement. Russian Judge, 1, 16–20. Dorogin, D. A. (2020). Classification mistakes in establishment of conditions of lawfulness of justifiable. Criminal Law, 1, 22–31. Gracheva, Y. V., & Chuchaev, A. I. (2017). Criminal law of Russia. General and special parts: A textbook. Contract, INFRA-M. Nikulenko, A. V., & Smirnov, M. A. (2020). Issues of qualification of exceeding of justifiable defense limits. Russian Investigator, 11, 32–36. https://doi.org/10.18572/1812-3783-2020-11-32-36 Plenum of the Supreme Court of the Russian Federation. (2012). Decision “on the application by the courts of the legislation on necessary

166 defense and infliction of harm when apprehending a person who has committed a crime” (September 27, 2012 No. 19). Moscow, Russia. Accessed April 30, 2022, from https://www.vsrf.ru/documents/own/ 8306/. Russian Federation. (1996). Criminal code of The Russian Federation (June 13, 1996 No. 63-FZ, as amended March 25, 2022). Moscow,

V. I. Dineka et al. Russia. Accessed April 30, 2022, from http://www.consultant.ru/ document/cons_doc_law_10699/. Russian Federation. (2011). Federal law “on the police” (February 7, 2011 No. 3-FZ, latest edition). Moscow, Russia. Accessed April 30, 2022, from http://www.consultant.ru/document/cons_doc_ LAW_110165/.

Specifics of Preventive Visit as a Type of Preventive Measures (Using the Example of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing) Tatiana F. Timofeeva , Viktor V. Timofeev , Olga V. Zakharchenko Tatyana N. Kozhina , and Anton K. Kuznetsov Abstract

The study of the peculiarities of a preventive visit represents a new direction in legal science. The paper focuses on the concept, goals, objectives, types, forms, procedures, and problems of a recently introduced type of preventive measure (PM) called a preventive visit, conducted by the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor), contributing to the reduction of violations of the law by business entities and other persons. The relevance of the research topic is due to scientific and practical interest in the problem of improving the efficiency and effectiveness of legal regulation and the quality of legal acts. The lack of a clear legal framework and uniform approaches to understanding the essence and content of preventive visits conducted in the territorial bodies of Rospotrebnadzor significantly hinders the development of legal regulation and causes difficulties in the practical activities to protect the rights and interests of consumers and human well-being. Based on the analysis of legal acts and scientific materials affecting various aspects of preventive visits, the paper aims to identify further directions for the development and improvement of preventive visits. The methodological toolkit was selected considering the research goals and objectives. The methodological basis consisted of a set of general scientific, private-scientific, and private-legal research methods: dialectical approach, systemic and logical methods, and formal-legal, comparative-legal, and other methods of scientific knowledge. The authors conclude T. F. Timofeeva (✉) · O. V. Zakharchenko · T. N. Kozhina Chuvash State University named after I.N. Ulyanov, Cheboksary, Russia V. V. Timofeev Cheboksary Institute (Branch) of the Moscow University for the Humanities and Economics, Cheboksary, Russia A. K. Kuznetsov Chuvash State University, Cheboksary, Russia

,

that more conceptual normative transformations are required. The research results can be used to study issues relating to the concept, the essence, and characteristics of preventive visits of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing of the Russian Federation, as well as to develop and justify proposals contributing to the development of regulatory and legal regulation in this area. The concept, tasks, forms, types, and process of a preventive visit require clarification. There is a need for a clearer understanding of the norms on preventive visits conducted in various participants of business activities by territorial bodies of Rospotrebnadzor to avoid violations of the rights and interests of participants in legal relations. Keywords

Preventive visit · Preventive measure · Rospotrebnadzor · Mandatory requirements · Controlled persons · Specialist · Federal state control

JEL Code

K2

1

Introduction

Despite a fairly rich history of practical work of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing in the Russian Federation (Rospotrebnadzor), leading to a reduction in the number of violations of legal requirements by business entities and other persons, so far it is too early to talk about ensuring strategic stability. In this regard, Rospotrebnadzor is reviewing its functions in the field of control and developing types of preventive measures (PM). In our opinion, this situation is

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_30

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satisfactory due to the increased risks of harm (damage) to legally protected values. This will have a very beneficial effect on business entities. In this regard, it seems appropriate to study the old issues and innovations of legal regulation because the legislation of Russia has not acquired either relatively correct definitions of PM or their clear principles and the order of implementation. Moreover, it is difficult to trace the increase in responsibility. Based on the analysis of legal acts and scientific materials regarding various aspects of preventive visits, the paper aims to identify further directions for its development and improvement. The research objectives are to explore the concept of preventive visits, identify their goals and objectives, disclose forms, types, and procedures for their implementation, and determine the current legal problems of preventive visits.

2

Methodology

The methodological basis consisted of a set of general scientific, private-scientific, and private-legal methods of research, including dialectical approach, systemic method, logical method, formal-legal method, comparative-legal method, and other methods of scientific knowledge. During the research, the authors used the following legal documents: • Decree of the Government of the Russian Federation “On Federal State Sanitary and Epidemiological Control (Supervision)” (June 30, 2021 No. 1100) (Government of the Russian Federation, 2021b); • Decree of the Government of the Russian Federation “On approval of the regulation on Federal State Control (Supervision) in the field of consumer protection” (June 25, 2021 No. 1005) (Government of the Russian Federation, 2021a); • Orders of Rospotrebnadzor Directorate (e.g., order for the Republic of Adygeya “On approval of programs to prevent risks of harm (damage) to legally protected values in 2022” (December 27, 2021 No. 229)) (Regional office for the Republic of Adygea of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing, 2021); • Guidance letter “On conducting preventive visits” (October 20, 2021 No. 17/4598) (Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing, 2021).

3

Results

A preventive visit is a new format of work of Rospotrebnadzor, leading to a reduction in the number of violations of legal requirements by business entities and other

persons. A preventive visit is a preventive measure carried out by a specialist either at the site itself (e.g., catering) or through the use of video conferencing. A preventive visit is an event, the content of which is a conversation between an authorized person and the audited subject within the framework of the issues specified in the legislation. For example, during a preventive visit, inspectors from Rospotrebnadzor in the Republic of Bashkortostan informed legal entities about the mandatory requirements for their activities. Legal entities were informed about general questions of legal regulation of travel agencies. Moreover, the requirements for the organization of tourist agencies, the procedure for responding to claims from consumers of tourist services, and the responsibility of tourist organizations under the contract for the sale of a tourist product were explained. Preventive visits are one of the possible ways to prevent violations. Additionally, general counseling and the collection of risk data are carried out during preventive visits. It seems logical to pose the question about the genesis of the term preventive visit. However, after analyzing the dictionaries of the Russian language, we could not find the information necessary. In terms of vocabulary, the term “prevention” comes from the Greek prophylaktikos and means “preventive” or “protective.” S. I. Ozhegov provides the all-encompassing meaning of the word “prevention,” describing it as a set of preventive measures aimed at maintaining and strengthening the normal state, order (Ozhegov, 1949). In turn, a visit (French visite) is an occasion or a period when somebody goes to see a place or person. S. I. Ozhegov interprets the meaning of the word “visit” as a formal visit. The explanatory dictionaries refer to a visit as a short visit, a detour, or a visit to someone. From the position of the stated concept, we can conclude that the concept of the preventive visit is an effective method of informing controlled persons, which includes predictive measures. The goals of preventive visits are as follows: 1. Prevention of violations of mandatory requirements established by the legislation of the Russian Federation by controlled persons; 2. Raising the awareness of business entities on how to comply with the legislation of the Russian Federation; the elimination of the causes and conditions that can lead to violation of the legislation; 3. Encouragement of controlled persons to fully and timely comply with the requirements of the Russian legislation. In 2021, the regional office of Rospotrebnadzor for the Krasnoyarsk Territory conducted more than 100 preventive visits; the regional office of Rospotrebnadzor for the Republic of Bashkortostan conducted 19 visits; the regional office of Rospotrebnadzor for the Leningrad Region conducted 134 visits. Since the beginning of 2022, there have been

Specifics of Preventive Visit as a Type of Preventive Measures (Using the Example of. . .

116 preventive visits in the Nizhny Novgorod Region and 27 preventive visits in the Republic of Mari El concerning the protection of consumer rights in business entities providing trade, hotel, hairdressing, and cultural and entertainment services (Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing, 2022). Since the beginning of 2022, 28 obligatory preventive visits were conducted in Pskov: 21 preventive conversations with the presence at the site and seven visits in the video-conferencing mode; during 19 visits, business entities were also consulted on the issues of interest to them. In the Republic of Adygeya, 81 preventive visits of individual entrepreneurs and commercial legal entities are planned for 2022. In the Chechen Republic, 87 preventive visits are planned for individual entrepreneurs and commercial legal entities, educational institutions, and hospitals. In 2022, the Republic of Bashkortostan is scheduled to conduct mandatory preventive visits for 809 monitored individuals. As we can see from the above data, Rospotrebnadzor aims to conduct preventive visits across the country in the shortest time possible. Thus, relevant departmental acts have been developed (e.g., “On approval of programs to prevent risks of harm (damage) to legally protected values”), plans have been formed, memos have been developed and placed on official websites, and prevention visits have also been conducted, including during 2021. Simultaneously, we did not find any information about preventive visits as of June 06, 2022, on the official websites of Rospotrebnadzor for the Samara Region, Rospotrebnadzor for the Belgorod Region, Rospotrebnadzor for the Vladimir Region, Rospotrebnadzor for the Kaliningrad Region, and several others. The lack of information about preventive visits is fraught with a decrease in the rate of communication between the government and society, as well as the weak development of social relations due to the non-use of information and communication technologies. The following legal acts regulate the procedure for a preventive visit: • Federal law No. 248-FZ (Article 52) (Russian Federation, 2020); • Regulations on the federal state control (supervision) in the field of consumer protection (paragraph 20), approved by Decree of the Government of the Russian Federation from June 25, 2021 No. 1005 (Regulation on the FSC) (Government of the Russian Federation, 2021a); • Regulation on Federal State Sanitary and Epidemiological Control (Surveillance) (clause 58), approved by Decree of the Government of the Russian Federation No. 1100 of

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June 30, 2021 (Regulation on SEC) (Government of the Russian Federation, 2021b). According to the law, a preventive visit can be conducted as early as the first year after the start of the business entity. The announcement of a preventive visit is reflected in the FGIS “Unified register of control (supervisory) activities.” A preventive visit is carried out within one working day. The period of conduct cannot exceed eight hours. The specific period is set in the notice of the mandatory preventive visit. The preventive visit is conducted in various forms. This can be a preventive conversation at the place of the controlled person’s activity—a contact preventive visit. This can be a video-conference call at the place of the controlled person’s activity—a remote preventive visit. The forms of conduct are not strictly established. An example is the regional office of Rospotrebnadzor for the Republic of Adygea, where preventive visits are planned, including at various sites in the form of round tables and other forms (Regional office for the Republic of Adygea of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing, 2021). This is stated in the Order “On approval of programs to prevent risks of harm (damage) to legally protected values in 2022” (December 27, 2021 No. 229). However, this Order does not explain other forms. During preventive visits, business entities can get detailed answers to their questions on compliance with mandatory legal requirements. Specialists give advice and recommendations on how to eliminate any violations: how often and what control and supervisory activities (CSA) can be carried out, what will be checked during these CSA, on the assigned risk category, and the grounds and recommended ways to reduce this category. During a preventive visit, a specialist may collect the necessary information to assign control objects to risk categories. During a preventive visit, a specialist can also answer the questions of controlled persons if these questions are related to the organization and implementation of state control; this process is called counseling. During the preventive visit, there are no consequences for the revealed violations—specialists do not issue orders and do not initiate administrative proceedings. The primary purpose of such visits is not to fine or suspend activities but to increase the knowledge of the business community and eliminate the causes that can lead to violations of the law. As we understand it, the explanations received by a controlled person are advisory (Part 8, Article 52 of Federal law No. 248-FZ) (Russian Federation, 2020). However, we should not forget that no one has canceled the active actions

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of the inspector in the presence of a clear, immediate threat to the entrepreneur’s activities. In this case, the legislation establishes a duty for an inspector to immediately send information to an authorized official of the control (supervisory) body to decide on conducting the CSA (Part 9, Article 52 of Federal law No. 248-FZ) (Russian Federation, 2020). Additionally, during a preventive visit, there may be consultations on such issues as the procedure for conducting CSA, the decision-making procedure on the results of such activities, the mechanism for appealing the decisions of the control body, and the content of the requirements and restrictions established by the legislation of the Russian Federation, governing subject-consumer relations. When providing consultations, no fee is charged, and the Rospotrebnadzor specialist is obliged to respect the confidentiality of information, access to which is restricted in accordance with the legislation of the Russian Federation. Information about the counseling should be reflected in paragraph 7 of the Act on the preventive visit. As practice shows, inspectors have problems with the implementation of acts of a methodological nature when performing this type of prevention. We are talking about the provisions of the Guidance letter “On conducting preventive visits” (October 20, 2021 No. 17/4598) (Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing, 2021). For example, the most common errors occur in preparing and sending notifications of an upcoming preventive visit. There are certain rules. First, all notifications are subject to registration in the electronic document management system (EDMS) in the “outgoing documents” block. Second, when executing a document card in the EDMS, the head of the supervisory organization must be selected as the second addressee. Third, the notice must be registered by the specialists of the document support department and the territorial department of the territorial body of Rospotrebnadzor (the territorial department) with the index 37/current number. An example of an incorrect document card is that the addressee cannot be a natural person. The office number must begin with index 37/ ____, not the index of the territorial department. A sample of a preventive visit notification card in the EDI is as follows. • The office number starts with the index 37/ ____; • The addressee is a legal entity and the head of the department of organization of supervision; • The document was created in the “outgoing documents” block (Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing, 2021).

T. F. Timofeeva et al.

Similar peculiarities apply to the registration of the refusal of a visit if any: • It should be registered in the “incoming documents” block; • The incoming document registration card should indicate the number of the notification sent to the controlled person; • It is sent via EDMS to the head of the supervisory organization department for the organization of accounting (regardless of whether the refusal was received by the Directorate or a territorial department). As we wrote earlier, it is mandatory to enter information about the visit into the FGIS “Unified register of control (supervisory) activities.” The law establishes a deadline: not less than five working days before the event. However, information about the disagreement of the controlled person with the event and information about the results of the preventive measure is entered on the day of the event. These points are monitored by the Prosecutor’s Office of the Russian Federation.

4

Conclusion

In conclusion, it is necessary to note that the presence of the required number of good laws and other normative legal acts regulating the order of preventive visits aimed at eliminating the conditions and causes that can lead to violations of mandatory requirements is still insufficient for optimal regulation of social relations. The main thing is to ensure that they are accurately implemented by those who are entrusted with their application. The objectives of preventive visits are as follows: 1. Preventing violations of consumer rights; 2. Providing advisory support to business entities; 3. Increasing transparency of PM control Rospotrebnadzor; 4. Preventing business risks.

by

Simultaneously, we propose to establish clearer forms of preventive visits without free interpretation in departmental legal acts and contact and remote types of PM. Suggestions for solving current problems in the preventive visit are as follows: 1. To prevent harm (damage) to legally protected values, it is necessary to fully implement the preventive measures

Specifics of Preventive Visit as a Type of Preventive Measures (Using the Example of. . .

established by Federal Law No. 248-FZ (Russian Federation, 2020); 2. To plan and conduct preventive visits on an ongoing basis; 3. To timely and fully enter information about preventive visits into the FGIS “Unified register of control (supervisory) activities”; 4. To intensify work on the application of administrative offenses included in the powers of Rospotrebnadzor and not to allow inappropriate qualification of revealed administrative offenses.

References Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing. (2021). Guidance letter “on conducting preventive visits” (October 20, 2021 No. 17/4598). Moscow, Russia. Accessed May 10, 2022, from https://rospotrebnadzor.ru/. Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing. (2022, May 27). The Department of Rospotrebnadzor held a meeting of the Advisory Council for the Protection of Consumer Rights in the Republic of Mari El. Accessed

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May 28, 2022, from https://rospotrebnadzor.ru/about/info/news_ region/news_details_region.php?ELEMENT_ID=21670. Government of the Russian Federation. (2021a). Decree “on approval of the regulation on Federal State Control (supervision) in the field of consumer protection” (June 25, 2021 No. 1005). Moscow, Russia. Accessed May 6, 2022, from https://base.garant.ru/401409540/. Government of the Russian Federation. (2021b). Decree “on Federal State Sanitary and epidemiological control (supervision)” (30 June 2021 No. 1100). Moscow, Russia. Accessed May 3, 2022, from https://base.garant.ru/401431882/. Ozhegov, S. I. (1949). Dictionary of the Russian language [online]. Accessed July 2, 2022, from https://slovarozhegova.ru/word.php? wordid=25059. Regional office for the Republic of Adygea of the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing. (2021). Order “on approval of programs to prevent risks of harm (damage) to legally protected values in 2022” (December 27, 2021 No. 229). Maykop, Russia. Accessed May 6, 2022, from http://01. rospotrebnadzor.ru/sites/default/files/prikaz_ot_27.12.2021_ no229.pdf. Russian Federation. (2020). Federal law “on state control (supervision) and municipal control in The Russian Federation” (July 31, 2020 No. 248-FZ). Moscow, Russia. Accessed May 3, 2022, from http:// www.consultant.ru/document/cons_doc_LAW_358750/.

Comparison of Legal Regulation of Expense Accounting in the Russian Federation and the People’s Republic of China Anatolii V. Kholkin , Vladimir D. Lubofeev , Alina V. Ovcharenko Anastasia A. Sozinova , and Lubov N. Shapkina

Abstract

JEL Code

Based on the preliminary definition of the objects of comparison, the paper aims to compare the regulations governing expense accounting in the Russian Federation and the People’s Republic of China. The authors achieve the research purpose by using various methods, including analysis, synthesis, deduction, induction, multidimensional comparison, dogmatic method, comparative legal method, tabular method, and graphical method. The research materials include the works of various authors and the regulations governing accounting in the Russian Federation and China. The originality and scientific novelty of this research lie in determining the objects of comparison of accounting standards in terms of expense accounting and identifying similarities and differences between standards. As a result of the research, the authors identified the objects of comparison of accounting standards, as well as differences in standards. For most of the objects of comparison, there were no similarities in the standards, which may become a possible reason for the incompatibility of reporting data when conducting spatial comparisons. Further study of this scientific problem should be aimed at further comparison of accounting standards governing the accounting of objects related to expenses that affect the amount of expenses.

M41

Keywords

Expenses · Accounting · Accounting standards · Comparison

A. V. Kholkin · A. A. Sozinova (✉) Vyatka State University, Kirov, Russia e-mail: [email protected] V. D. Lubofeev · A. V. Ovcharenko · L. N. Shapkina Belgorod State University, Belgorod, Russia

1

,

Introduction

Expenses are one of the most important accounting items, information about which is of great importance for managerial needs. In this regard, the amount of expenses is disclosed in financial statements, which are widely used in the analysis of economic activity. The analysis necessitates a spatial comparison of expenses of various enterprises, especially when comparing indicators of economic entities located in territories of different countries, which is necessary to study the experience of cost management. However, when making such comparisons, one should not be limited to an algebraic comparison of the figures given in the reporting because processes for preparing and compiling reports and maintaining records may differ due to differences in accounting standards underlying the organization of accounting processes. Such differences cause the incompatibility of data. Therefore, before comparing reporting indicators, it is necessary to identify the existence of differences in accounting standards governing the accounting procedure for objects similar in the name; otherwise, unreliable results may be obtained. Therefore, the research topic is relevant. Thus, based on the definition of the objects of comparison, this research aims to compare the regulations governing the accounting of expenses in the Russian Federation and the People’s Republic of China and identify similarities and differences. Achieving this purpose involved solving the following tasks: 1. Establishing the composition of the compared normative acts; 2. Defining the objects of comparison;

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_31

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A. V. Kholkin et al.

Fig. 1 Objects of comparison. Source: Compiled by the authors

3. Comparing selected objects to identify similarities and differences, as well as their justification. The scientific novelty of the research lies in the definition of objects of comparison of accounting standards in terms of expense accounting. The scientific significance of the research lies in identifying similarities and differences in the standards that objectively cause differences in the amounts of actual expenses reflected in statements. The practical significance of the research lies in identifying and evaluating the feasibility of using accounting data, including publicly disclosed, without bringing them into a comparable form for spatial comparisons.

2

Methodology

To achieve the research purpose, the authors used analysis, synthesis, deduction, induction, multidimensional comparison, dogmatic method, comparative legal method, tabular method, and graphical method. The used materials are the regulations on expense accounting applied in the Russian Federation and China and scientific publications. During the research, the authors conducted a literature review, including the publications of the following authors: Chen and Rezaee (2012), Ching Chi Heng and Noronha (2011), Duvanskaya and Sverchkova (2016), Fang et al. (2021); Goncharenko and Khadaroo (2020), Habib (2015), Kruglyak and Shvyreva (2017), Kuzmina et al. (2017), Labyntsev et al. (2017), Li et al. (2018), Liu and O’Farrell (2011), Ma et al. (2018, 2022), Pasko et al. (2021), Sokolov (2016), Song and Zhou (2021), Sozinova and Meteleva (2022), Xie (2012), Wang (2013), Wen et al. (2021). The conducted literature analysis shows that available publications do not compare the accounting standards of the Russian Federation and China in terms of expense accounting, which indicates that today’s science does not pay attention to such issues, which determines the relevance and scientific novelty of this research, as well as its scientific and practical significance.

3

Requirements for disclosure of expenses in accounting statements

Procedure for recognizing expenses in the statement of financial results

General issues of formation of the cost of sales The procedure for recognizing expenses in accounting

Approaches to grouping expenses

Approaches to cost estimation

Cost classification and approaches to cost classifications

Composition of disposal of assets not recognized as expenses

Elements of the concept of expenses

Comparison object

Results

The solution of the set tasks led to the following results. First, the authors established the composition of regulations in the field of expense accounting regulation in the Russian Federation and China. Second, the authors identified the objects of comparison, the composition of which is illustrated by the diagram shown in Fig. 1. The description of the comparison objects is given in Table 1. Third, the following similarities and differences between the standards were identified (Table 2). As can be seen from Table 2, for almost all comparison objects, there are differences between Russian and Chinese standards, which can lead to incompatibility of reporting data in terms of expenses. This makes it challenging to conduct spatial comparisons of reporting data of economic entities.

4

Discussion

The comparison of accounting standards was based on the preliminary study of the accounting regulation system, which made it possible to define the composition of the compared normative acts clearly. The similarity of regulatory systems was found, namely, that it is based on the relevant law in the studied countries: 1. In the Russian Federation—Federal law “On Accounting” (December 6, 2011 No. 402-FZ) (Russian Federation, 2011) 2. In the People’s Republic of China—the People’s Republic of China Accounting Law (People’s Republic of China, 1985) Both laws define expenses as accounting objects: 1. In the Federal Law—Article 5, 2. In the Law of the People’s Republic of China—Article 10.

Comparison of Legal Regulation of Expense Accounting in the Russian Federation and. . .

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Table 1 The description of the comparison objects Comparison object 1. Elements of the concept 2. Composition of disposals of assets not recognized as expenses 3. Approaches to the classification of expenses 4. Approaches to expense estimation 5. Approaches to expense grouping 6. General issues of cost formation 7. Procedure for recognizing expenses 8. The procedure for recognizing expenses in financial statements 9. Requirements for disclosure of expenses in reporting

Description The elements of the concept are form, result, and reference to life The standard establishes certain exceptions or examples of disposals that do not lead to the recognition of expenses The standard establishes the division of expenses into groups for the purposes of reporting The standard defines the procedure for valuation of consumption The standard defines the procedure for grouping expenses and their distribution The standard establishes approaches to the process of cost formation The standard specifies conditions for recognition or certain dates or events that determine the statement of expenses The standard contains conditions, indications of specific dates, or events that determine the transformation of expenses The standard establishes the composition of indicators required to be disclosed in financial statements

Source: Compiled by the authors

Table 2 The results of the comparison Comparison object 1. Elements of the concept 2. Composition of disposals of assets not recognized as expenses 3. Approaches to the classification of expenses 4. Approaches to expense estimation 5. Approaches to expense grouping 6. General issues of cost formation 7. Procedure for recognizing expenses 8. Procedure for recognizing expenses in financial statements 9. Requirements for disclosure of expenses in reporting

Result No matches Not determined Not determined Not determined Not determined Not determined Matches Partial matching No matches

Source: Compiled by the authors

In the Russian Federation, expense accounting is regulated by the Regulations on accounting “Expenses of the organization” PBU 10/99 (Ministry of Finance of the Russian Federation, 1999). In the People’s Republic of China, expense accounting is defined by the Basic Accounting Standards for Commercial Organizations (Order No. 76 of the Ministry of Finance of the People’s Republic of China) (Ministry of Finance of the People’s Republic of China, 2006). The objects of comparison (i.e., parameters that can determine the amount of expenses in accounting) are determined based on the analysis of the content of the above regulations. The following objects of comparison are distinguished: 1. Elements of the concept of “expenses”; 2. Composition of disposals of assets not recognized as expenses; 3. Classification of expenses and approaches to classification of expenses; 4. Approaches to expense estimation; 5. Approaches to expense grouping; 6. General issues of cost formation; 7. Procedure for recognizing expenses in accounting;

8. The procedure for recognizing expenses in financial statements; 9. Requirements for disclosure of expenses in reporting. Elements of the concept provide for the definition and comparison of all attributes of the concept of expenses. The allocation of this object is due to the fact that differences in the concept will necessarily lead to differences in amounts. The composition of disposals of assets not recognized as expenses implies that the standard establishes certain exceptions or examples of disposals that do not lead to recognition of expenses, including their approximate list, or approaches to determining such disposals. The introduction of this parameter is necessary because differences in the composition of such disposals will lead to differences in the amounts of expenses. Classification approaches should allow for the grouping of expenses for reporting purposes. This object of comparison is highlighted since there are different classifications of expenses, which affects their presentation in the reporting. Approaches to estimating expenses involve normative fixing of the valuation procedure. The allocation of such an

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object is necessary because differences in the assessment will lead to different amounts of expenses. Approaches to grouping expenses involve the distribution of expenses between groups and periods. Differences in such groupings will lead to differences in the amounts of expenses. The regulation of general issues of cost formation in normative acts allows determining and introducing uniformity in the process of calculating and reporting the amount of actual cost. The procedure for recognizing expenses consists of specifying the conditions for recognition, dates, or events, the occurrence of which requires the recognition of expenses (their statement). This can also lead to differences in the amount of expenses. The procedure for recognizing expenses in the statement of financial results involves the establishment of a system of conditions, dates, or events, in which expenses are involved in the formation of the financial result of the period (transformation of expenses). Mismatched conditions (dates and events) also lead to differences in the amounts of expenses. The requirements for disclosing expenses in reporting determine the composition of the indicators prescribed for reflection. This object is singled out because the requirement to disclose indicators leads to differences in the amount of expenses. Further comparison of these objects revealed the following. The Russian accounting standard identifies the following elements as elements of the concept of expenses (paragraph 2 of PBU 10/99): 1. Form: a decrease in benefits due to disposal of assets or incurrence of liabilities; 2. Result: a decrease in equity not related to the actions of owners.

A. V. Kholkin et al.

Disposals of assets not recognized as expenses are set in paragraph 3 of PBU 10/99. There are no analogs in Chinese standards. The classification of expenses in the accounting of the Russian Federation is determined by paragraph 4 of PBU 10/99; the approaches to classification are established by paragraphs 5 and 11 of PBU 10/99. Simultaneously, prescriptions are established for recognizing specific expenses in a certain class and the possibility of recognizing expenses in different classes, depending on the assignment of corresponding income to certain classes. This issue is not defined by the Chinese standards in terms of the Basic Standards. Simultaneously, Accounting Standard for Commercial Enterprises No. 30—Presentation of Financial Statements provides for disclosing expenses divided into several groups in the income statement, the names of which do not coincide with the Russian standards; there are no approaches to forming groups. In this regard, we can conclude that the obtained result is not obvious. Approaches to expense estimation are defined in the Russian standard in paragraphs 6 and 14. In the Chinese standard, there are no such approaches. Approaches to grouping expenses are established in PBU 10/99 in paragraphs 7 and 8. There are no such approaches in the Chinese standards. General issues of the formation of the cost of sales are disclosed in paragraph 9 of PBU 10/99, including the need to allocate expenses between periods. The possibility of full recognition in the cost of sales of management and commercial expenses for the period was also established. No analogs were found in the Chinese standard. The procedure for recognizing expenses in accounting is established by paragraph 16 of PBU 10/99 by specifying the following conditions:

In the same way, the Chinese Standard (Article 33) establishes the following elements:

1. Justification of expenses by law (contract and custom); 2. Certainty of the amount of consumption (its measurability); 3. Confidence in decreasing economic benefits.

1. Form: outflow of economic benefits; 2. Result: a decrease in equity not related to the distribution of profits to the owner; 3. Attitude to everyday life.

Similarly, paragraph 34 of the Basic Standards defines the following conditions:

After comparing this element, we can conclude that the concept formulated in the standards of the People’s Republic of China is not specific enough in terms of form. Expenses are reduced only to the facts of everyday life, while Russian standards are broader in this regard, and the consequences of extraordinary facts and events also apply to expenses. There are also differences in results: the Chinese standards do not indicate a possible decrease in equity arising as a consequence of decisions taken by owners.

1. Confidence in decreasing economic benefits; 2. Measurability of expenses. Thus, the conditions for recognizing expenses do not completely match, but this will not lead to differences in the amounts of expenses. The procedure for recognizing expenses in the income statement is established in the Russian Federation by paragraph 18 of PBU 10/99 in the form of the following provisions:

Comparison of Legal Regulation of Expense Accounting in the Russian Federation and. . .

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1. Correspondence of income and expenses; 2. Compulsory direct or indirect distribution of expenses that determine receiving income in several periods; 3. If it is confirmed that it is impossible to complete the creation of an asset, costs of its creation are recognized as expenses of the period; 4. Expenses are recognized regardless of taxation rules; 5. Expenses are recognized when a liability is incurred, whether or not it resulted in the creation of an asset.

accounting standards, which should be the subject of other studies in which the results of this study can be used. Thus, as the comparison showed, there are differences in standards, which can lead to differences in the amounts of expenses disclosed in the financial statements. These differences should be considered when making spatial comparisons of the value of expenses and corresponding business indicators.

In the Chinese standard, this procedure is regulated by article 35. Based on the analysis of this article, the following provisions can be determined:

5

1. Correspondence of income and expenses is determined by a decrease in sales income by the amount of cost when recognizing revenue; 2. Expenses reduce the profit of the period in which it becomes evident that no economic benefits have been received or assets have been recognized. 3. If liability is recognized that does not depend on the recognition of an asset, it is included in expenses in the period in which it arises. It can be concluded that expenses are recognized regardless of taxation rules based on the fact that the regulatory system includes Accounting Standard for Commercial Enterprises No. 18—Income Tax, which requires accounting for objects related to differences between taxable and accounting profit. The requirement for distributing expenses between periods was not found in the regulations of the People’s Republic of China. Thus, the compared standards partially correspond. The requirements for disclosing expenses in reporting are established by Sect. V of PBU 10/99. It requires disclosing expenses with their division into specified indicators, including other expenses. No other costs are identified in the Chinese standards. Additionally, the Russian standards require that expenses be singled out in reporting if the corresponding income amounts to five or more percent of the total income. There are no similar requirements in the Chinese standards. It should also be pointed out that this research cannot be considered complete because the amount of expenses is determined not only by the very concept of expenses or the rules for ascertaining and transforming expenses but also by the amount of disposal of a previously recognized asset and an incurred liability. The amounts of such objects are formed in accordance with the standards that determine the accounting treatment for a particular asset or liability. Differences can be identified only in the process of comparing almost all

Conclusion

This research compares the regulations governing the accounting of expenses in the Russian Federation and the People’s Republic of China, which is necessary to identify possible incompatibility of reporting data due to differences in the procedure for forming and assessing reporting indicators. The composition of the compared normative acts was determined to conduct the comparative analysis. Particularly, it was found that the accounting regulation in the Russian Federation and the People’s Republic of China has common features. To carry out the comparison, the authors determined the following objects of comparison: 1. Elements of the concept of “expenses”; 2. Composition of disposals of assets not recognized as expenses; 3. Classification of expenses and approaches to classification of expenses; 4. Approaches to expense estimation; 5. Approaches to expense grouping; 6. General issues of cost formation; 7. Procedure for recognizing expenses in accounting; 8. The procedure for recognizing expenses in financial statements; 9. Requirements for disclosure of expenses in reporting. The need to use these objects of comparison was justified based on their impact on the value of indicators of expenses given in the financial statements. Based on the selected objects of comparison, the authors identified similarities and differences in the standards. Differences were found in almost all objects. The reasons for these differences are seen in the fact that the People’s Republic of China adopted the policy of divergence of its own standards with international standards, whereas the Russian Federation formed its own system of accounting regulation, in which international standards form a certain basis for developing the Russian standards.

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The presence of the identified differences may explain the differences between the financial statements of Russian and Chinese enterprises. Additionally, the causes of differences include not only the identified differences in expense accounting standards. They may also be due to a connection between expense indicators with resource flows and liabilities, and differences in asset and liability accounting standards. The identification of such differences requires a separate study, in which the results obtained during this research can be used.

References Chen, Y., & Rezaee, Z. (2012). The role of corporate governance in convergence with IFRS: Evidence from China. International Journal of Accounting and Information Management, 20(2), 171–188. https://doi.org/10.1108/18347641211218470 Ching Chi Heng, L., & Noronha, C. (2011). The impact of the new accounting standards for business enterprises (ASBE) on financial results of mainland Chinese listed companies. Advances in Accounting, 27(1), 156–165. https://doi.org/10.1016/j.adiac.2011.04.006 Duvanskaya, N. A., & Sverchkova, O. F. (2016). Features of adaptation of international financial reporting standards in the Russian commercial organizations. International Journal of Economics and Financial Issues, 6(1S), 68–73. Fang, X., Guo, Y., Mei, B., & Ye, J. (2021). Implementation costs of IFRS 9 for non-financial firms: Evidence from China. Accounting and Finance, 62(2), 2781–2805. https://doi.org/10.1111/acfi.12889 Goncharenko, G., & Khadaroo, I. (2020). Disciplining human rights organizations through an accounting regulation: A case of the ‘foreign agents’ law in Russia. Critical Perspectives on Accounting, 72, 102129. https://doi.org/10.1016/j.cpa.2019.102129 Habib, A. (2015). The new Chinese accounting standards and audit report lag. International Journal of Auditing, 19(1), 1–14. https:// doi.org/10.1111/ijau.12030 Kruglyak, Z. I., & Shvyreva, O. I. (2017). Improving the Russian regulatory basis for international financial reporting standards – Based on qualitative characteristics of financial information. Journal of Applied Economic Sciences, 12(8), 2326–2338. Kuzmina, M., Akimova, B., Amanova, G., Saparbayeva, S., Erzhanov, A., Sadiyeva, A., . . ., Kazhmukhametova, A. (2017). On the standards of management accounting: Comparison of Russian and Kazakh current state. Espacios, 38(24). Accessed April 1, 2022, from https://www.revistaespacios.com/a17v38n24/ a17v38n24p21.pdf. Labyntsev, N. T., Sharovatova, E. A., Omelchenko, I. A., & Makarenko, T. V. (2017). Tendencies of standardization of management accounting in Russian and international practices. European Research Studies Journal, 20(3B), 45–60. Li, S., Wu, H., Zhang, J., & Chand, P. (2018). Accounting reforms and conservatism in earnings: Empirical evidence from listed Chinese companies. Journal of International Accounting, Auditing, and Taxation, 30, 32–44. https://doi.org/10.1016/j.intaccaudtax.2017. 12.004 Liu, C., & O’Farrell, G. (2011). The impact of IFRS on earnings management: Evidence from the People’s Republic of China.

A. V. Kholkin et al. International Journal of Services and Standards, 7(3–4), 264–277. https://doi.org/10.1504/IJSS.2011.045052 Ma, L., Chen, X., Zhou, J., & Aldieri, L. (2022). Strategic management accounting in small and medium-sized enterprises in emerging countries and markets: A case study from China. Economies, 10(4), 74. https://doi.org/10.3390/economies10040074 Ma, C., Du, H., & Zhang, J. (2018). Chinese accounting restatement and the timeliness of annual report. Applied Economics, 50(50), 5436–5453. https://doi.org/10.1080/00036846.2018.1486995 Ministry of Finance of the People’s Republic of China. (2006). Order “Accounting standards for enterprises-basic standards” (February 15, 2006, revised July 23, 2014 No. 76). Accessed April 1, 2022, from https://www.casc.org.cn/2018/0815/202818.shtml. Ministry of Finance of the Russian Federation. (1999). Order “on approval of the accounting regulations ‘expenses of the organization’ PBU 10/99” (May 6, 1999 no. 33n). Moscow, Russia. Accessed April 1, 2022, from http://www.consultant.ru/document/ cons_doc_LAW_12508/. Pasko, O., Chen, F., Tkal, Y., Hordiyenko, M., Nakisko, O., & Horkovenko, I. (2021). Do converged to IFRS national standards and corporate governance attributes affect accounting conservatism? Evidence from China. Scientific Papers of the University of Pardubice, Series D: Faculty of Economics and Administration, 29(2), 1272. https://doi.org/10.46585/sp29021272 People’s Republic of China. (1985). Accounting law of the People’s Republic of China (January 21, 1985, revised November 05, 2017). Accessed April 1, 2022, from http://www.npc.gov.cn/zgrdw/npc/ xinwen/2017-11/28/content_2032722.htm. Russian Federation. (2011). Federal law “on accounting” (December 16, 2011 No. 402-FZ). Moscow, Russia. Accessed April 1, 2022, from http://www.consultant.ru/document/cons_doc_LAW_122855/. Sokolov, V. (2016). Russia. Can IFRS be considered accounting? In D. Bensadon & N. Praquin (Eds.), IFRS in a global world (pp. 187–200). Springer. https://doi.org/10.1007/978-3-319-282251_14 Song, F., & Zhou, J. (2021). Principles-based accounting standards and the timeliness of annual reports: Evidence from China. Asian Review of Accounting, 29(3), 399–442. https://doi.org/10.1108/ARA-072021-0120 Sozinova, A. A., & Meteleva, O. A. (2022). Sites of states with a dynamically developing socio-political structure and economy: Analyzing forms and methods of obtaining competitive advantages of transnational (global) companies. In E. G. Popkova & I. V. Andronova (Eds.), Current problems of the world economy and international trade (pp. 233–242). Emerald Publishing Limited. https://doi.org/10.1108/S0190-128120220000042022 Wang, Y. (2013). The establishment of a new accounting standards system in China. In E. Qi, J. Shen, & R. Dou (Eds.), The 19th international conference on industrial engineering and engineering management (pp. 435–439). https://doi.org/10.1007/978-3-64238433-2_48 Wen, W., Humphrey, C., & Sonnerfeldt, A. (2021). The strategic significance of the CICPA in the making of a Chinese home-grown public accounting profession. Accounting and Business Research, 51(6–7), 636–676. https://doi.org/10.1080/00014788.2021.1935684 Xie, H. (2012). Study on new accounting standards for listed companies in China. In X. Qu & Y. Yang (Eds.), Information and business intelligence (pp. 572–577). https://doi.org/10.1007/978-3-64229087-9_89

Mechanisms of the Legal Management of Sustainable Development Risks at the Macro Level of Economic Systems Tatyana S. Bobkova , Elena A. Bratukhina and Sergey E. Akopov

, Irina N. Bachurinskaya

Abstract

JEL Codes

In this paper, we aim at developing a system of models (mechanisms) of legal regulation of sustainable development risks within the macro level of economic systems. For this, we use the methods of classification and comparative analysis, as well as the method of forecasting. We study the issue of systematisation of models (mechanisms) of legal provision of protecting from sustainable development risks at the level of countries. The analysed approaches to the determination of legal framework allow identifying the models of regulation in this sphere, formed in the course of historical, national and regional development and under the influence of the globalisation processes. It is revealed that the most promising models of regulation are those that are oriented toward the adoption and achievement of the Sustainable Development Goals. The novel aspect of this paper is due to the development of the theoretical aspects of the characteristics and classification of models (mechanisms) of legal management of the reduction of risks in the sphere of national sustainable development.

K32 · О11 · О44 · Q01 · Q56 · Q57 · Q58

Keywords

Sustainable development risks · Legal management · Supranational model of regulation · National model of regulation · Globalisation

T. S. Bobkova Syzran Branch of Samara State University of Economics, Syzran, Russia E. A. Bratukhina (✉) · I. N. Bachurinskaya Vyatka State University, Kirov, Russia e-mail: [email protected] S. E. Akopov Rostov State University of Economics, Rostov-on-Don, Russia

1

,

Introduction

Successfulness of the international integration of countries into the world community is connected with many factors, among which an important role belongs to the implementation of sustainable development principles. Though conceptual foundations are widely implemented within the strategies of many countries, the concept of sustainable development, adopted by the UN members, is developing, and there are still many debatable issues. One of the most important aspects of sustainable development at the international, national and local levels is the formation of a comprehensive legal framework for the establishment of the approaches and norms of this process within the orientation toward the achievement of balance of the three components (environmental, economic and human development). Legal regulation in this direction should imply the adoption of approaches of the legislator (state, supranational union) to the implementation of these processes’ goals and reduction of risks. These risks include environmental (reduction of natural resources, environmental pollution, climate change), social (decrease in the quality of life and human development) and economic (decline of the economy, reduction of the development of infrastructure, decrease in innovations, inflation). Though the legal framework at the macroeconomic level of economic systems is formed given the common conceptual programme foundations of this direction’s regulation, adopted by the UN, most countries use certain national or regional specific aspects. Given the above, certain models of regulation of this phenomenon are formed, which predetermines the importance of the selected research topic. This paper’s goal is to develop a system of models (mechanisms) of legal regulation of sustainable development risks at the macro level of economic systems. For this, the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_32

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following tasks should be solved: identifying the approaches to the formation of models (mechanisms) of regulation of this direction; systematising the main models of the studied type; analysing the prospects for the use of models of legal management of risk in this sphere given the modern challenges in the economic, social and environmental spheres.

2

Materials and Methods

The issues of the legal framework for sustainable development at the macro level and risks in this sphere have been studied in Allaeva (2021), Fidélis et al. (2021), Friant et al. (2021), Henrysson and Nuur (2021), Masuda et al. (2021), Masuhara et al. (2019), Mazur-Wierzbicka (2021), Morita et al. (2019) and Silander (2022). The provisions of the above studies mainly identify the characteristics of the legal framework for the regulation of the considered risks at the level of certain countries (groups of countries). Thus, there is no comprehensive assessment of the types of models (mechanisms) that exist at the level of different legal systems. In this research, we use several methods that are required to solve the envisaged tasks. The method of classification is utilised to distinguish the main types of models (mechanisms) of legal management of sustainable development risks of countries. Comparative analysis is used to identify the similar characteristics of management in this sphere that would allow assigning it to a certain type (category). The method of forecasting is needed to reveal the prospects for the orientation toward the studied models (mechanisms).

3

Results

Let us elaborate on the main approaches of research to the assessment of the formation of models (mechanisms) for the regulation of sustainable development risks. First off, there is an approach implying the implementation of the legal regulation of the given sphere within the supranational law. In this direction, regulation is oriented toward the legal framework of a supranational union (e.g., the EU or the UN). Friant et al. (2021) and Silander (2022) point to the fact that at the modern stage, there is a supranational model (mechanism) of legal regulation of sustainable development management, which is the foundation of the transformation of threats (risks) in the windows of opportunities in the EU. The authors state that the legal approach to regulation and declaration in this sphere, adopted by the EU member states for the period until 2030 (formulated within the main goals of sustainable development of the UN until 2030

(United Nations General Assembly, 2015)), could be adapted at the global level since the presented programme aspects include a large-scale coverage of risks and directions of their solutions in this sphere. The management at the supranational level in this direction is conducted based on the following regulatory acts: • UN programme document on the Sustainable Development Goals until 2030 (United Nations General Assembly, 2015); • The EU Strategy for Sustainable Development (EU SDS), which declares the course of the EU members stated toward sustainable development in the context of main goals and the coordinated resolution of problems in this sphere at the level of member states; • A range of legal documents in the following spheres: 1) environmental goals: foundations of energy efficiency; action plan in the sphere of innovations within greening (updated list of equipment and technologies that are used in all spheres of life activities); Decree of the EU Council that regulates the scheme of environmental marking of products (services); 2) economic goals: programmes of creating a favourable entrepreneurial climate for SMEs at the level of the EU member states; regulatory acts on unfair competition; 3) goals in the social sphere: programme documents on decent work, greening and personnel management; programme foundations of the provision of healthcare system affordability and growth of well-being. • Circular Economy Action Plan, adopted by the European Commission in 2020. This regulatory document implies the implementation of the circular economy concept that is connected to the implementation of a closed cycle that envisages restoration of resources, absence or repeated use of waste, the transition from the traditional types of energy to renewable sources and the creation of new jobs within new productions. This plan is the basis for the above regulatory documents in the environmental, social and economic spheres sectors. It is possible to state that the supranational model, formulated in Friant et al. (2021) and Silander (2022), is based on the following specific features: • Adoption of intergovernmental goals (environmental, social and economic); • Reduction of risks (threats), the transformation of measures on their prevention: formation of new types of activities, new types of approaches; transformation of the structure of the labour market; development of demand and sales of new eco-friendly products (services); provision of human resources’ readiness for challenges in different spheres; ensuring the development of an economy

Mechanisms of the Legal Management of Sustainable Development Risks at the Macro. . .

Legal regulation (range of documents) in the sphere of necessity for the production of goods with a longer exploitation period. Goal: reduction of polluting waste (chemical materials, etc.), reduction of one-time expenses for the economic protection of the population.

Directions and goals ↓ Development of public Adoption of plans and procurement and increase in legal acts in the sphere of the opportunities and repeated use of resources support for consumer rights in the industry. Goal: (legal documents on public reduction in the level of procurement, increase in the waste, the interaction capabilities in the between the spheres of maintenance of products). economy, growth of Goal: reduction of the level employment through the of waste, protection of development of intersociety's sustainable sectoral structures. development.

Creation of circa 700,000 new jobs in the EU

↓ Growth of GDP of the EU member states by 0.5%

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Increase in resource efficiency and energy efficiency in products, reduction of СО2 emissions in the process of their production. Goal: environmental protection through the implementation of renewable sources, protection of the health of future generations, reduction of the dependence of national economies on traditional types of energy.

Reduction of energy dependence on countries that supply energy and fuel. Improvement of ecology.

Fig. 1 Main provisions of the regulation of the circular economy of the EU member states within the Circular Economy Action Plan. Source: Compiled by the authors based on Fidélis et al. (2021), Henrysson and Nuur (2021) and Mazur-Wierzbicka (2021)

that is oriented toward non-waste reduction, repeated use of resources and energy independence. The example of a supranational model of legal management of sustainable development risks is presented in Henrysson and Nuur (2021) and Mazur-Wierzbicka (2021). The authors elaborate on the regulation of the development of the circular economy, which is the basis for the sustainable development of the EU. Fidélis et al. (2021), Henrysson and Nuur (2021) and Mazur-Wierzbicka (2021) state that countries of the EU that focus on the complex implementation of the SDGs have been forming a model of the circular economy since 2015. Its foundations are presented in the provisions of the Circular Economy Action Plan. Their systematisation in the context of directions, goals and forecast parameters is presented in Fig. 1. Second, it is necessary to analyse an approach connected with the legal regulation of this direction in the context of the synthesis of supranational law and national law in the sphere of localisation of the goals of territories’ development. This approach is focused on the complex implementation of the supranational model of sustainable development, which is transformed in the direction of localisation of territorial unions for better implementation of benchmarks in this direction. The authors of Masuda et al. (2021), Masuhara et al. (2019) and Morita et al. (2019) dwell on the foundations of the legal regulation of this sphere in Japan. According to scholars, Japan uses the following mechanisms: • The entire regulatory framework and programmes of regulation of sustainable development, adopted by the UN

members, including the UN programme documents on the main Sustainable Development Goals until 2030 (United Nations General Assembly, 2015); • To achieve the Sustainable Development Goals, Japan uses the mechanism of vertical communication at the level of the state, international organisations, national institutions of management and organisations of various spheres and territorial subordination. This mechanism implies the actualisation of the Sustainable Development goals for municipalities, implemented in the context of the provision of Japanese law on the restoration of cities and citizens’ careers and programme documents in the sphere of achievement of the selected milestones. Based on such an approach in the legal regulation, Japan ensures the sustainable development of cities (at the level of the main components) and formulation of the categories and elements of risks in this sphere. The legal management of goals and risks of sustainable development in Japan is to facilitate the achievement of the global goals in this sphere, adopted within the UN programme documents. According to Masuda et al. (2021), such an approach allowed ensuring the consistent sustainable development of cities, due to the development of responsibility of local authorities. Another approach focuses on the legal regulation of the considered sphere in the context of the orientation toward the supremacy of national interests over the supranational interests in a specific sphere and at the level of certain indicators of all components of the sustainable development risks and goals. The focus on this approach is peculiar for countries that do not demonstrate prominent results in

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globalisation or countries that are on the path of reformation of the entire legal system. Allaeva (2021) and Kim and Park (2019) are devoted to the research of the legal framework for sustainable development in Uzbekistan. The authors note that the government declares the main milestones of sustainable development, adopted in the context of the UN programme documents in this sphere. At that, the regulatory framework does not imply a systemic approach to the reduction of risks in terms of the main components, namely the quality of life, support for the sustainability of society’s development and competitive development of the economic spheres. Economic development predetermines the emergence of other components of the national sustainable development, which is largely connected with the orientation of the regulatory documents on subsidies for the continuation of the functioning of the key sectors (e.g., textile industry), which are not competitive in external markets due to the absence of innovations, ageing of equipment and labour resources’ reluctance to master new machinery. Also, there is no comprehensive approach to the regulation of innovative development and the creation of a favourable entrepreneurial climate.

4

Discussion

Analysis of the provisions of the presented approaches has shown that, at the modern stage, the following models (mechanisms) of legal management of sustainable development risks exist: • Supranational model, which implies the national legal system’s focus on the course for provision of goals and protection from risks within the main components of sustainable development, adopted at the level of the EU or the UN. The model presented in the UN programme documents is a foundation for sustainable development for the members of this organisation. The supranational model is peculiar for countries that have been working in the sphere of sustainable development of all sectors for a long time; • Synthesized model of development of supranational law and national law in the sphere of localisation of territories’ development goals. Application of such a model envisages active involvement of local authorities in the formation, implementation and control over the achievement of goals; • National model of legal management, which is based on declaring the global goals and the focus on the traditional approaches within the three components of sustainable development. Such a model of regulation is used in developing countries with high dependence on the interests of the government.

5

Conclusion

We can conclude that the analysed models (mechanisms) of the legal management of sustainable development risks have different prospects for further application. The first considered model (supranational), which has been used by the countries that are leaders in the sphere of sustainable development for a long time, can be adopted as the basic model by countries that do not have large differences in the social, economic and environmental sectors at the level of regions (territories). As for the second model (synthesized), it is promising for countries which territories (regions) are different in the social, economic and environmental sectors and require an additional local identification of goals and risks to their achievement. Regarding the third model, it is possible to state that its perspectives are low and there is no possibility to form and support the main components of sustainable development, which implementation is necessary for the wellbeing of future generations. Development of new mechanisms of this category is possible in case of adoption—at the global (UN) and international (EU, etc.) levels—the strategic decisions on the necessity to change the systems of reaction to the considered risks, in the case of emergence of threats (of environmental, social or economic character), which cannot be overcome based on the existing approaches. Further improvement of the regulatory framework could be initiated by international communities that focus on the development of global cooperation in the management of sustainable development risks. Due to the changes that take place in the sphere of environmental pollution, climate and socio-economic relations, such initiatives will be inevitable in the near future.

References Allaeva, G. J. (2021). Sustainable development methodology of fuelenergy complex of the republic of Uzbekistan. E3S Web of Conferences 289, 07033. Accessed June 21, 2022, from https:// www.e3s-conferences.org/articles/e3sconf/pdf/2021/65/e3sconf_ esr2021_07033.pdf Fidélis, Т., Cardoso, A. S., Riazi, F., Miranda, A. C., Abrantes, J., Teles, F., & Roebeling, P. C. (2021). Policy narratives of circular economy in the EU – Assessing the embeddedness of water and land in national action plans. Journal of Cleaner Production, 288, 125685. Accessed June 21, 2022, from https://www.sciencedirect.com/ science/article/pii/S0959652620357310 Friant, M. F., Vermeulen, W. J. V., & Salomone, R. (2021). Analysing European Union circular economy policies: Words versus actions. Sustainable Production and Consumption, 27, 337–353. Henrysson, М., & Nuur, C. (2021). The role of institutions in creating circular economy pathways for regional development. The Journal of Environment & Development, 30(2), 149–171. Kim, Y.-J., & Park, J. (2019). A sustainable development strategy for the Uzbekistan textile industry: The results of a SWOT-AHP analysis. Sustainability, 11, 4613. Accessed June 21, 2022, from https:// www.mdpi.com/2071-1050/11/17/4613#cite

Mechanisms of the Legal Management of Sustainable Development Risks at the Macro. . . Masuda, H., Okitasari, M., Morita, K., Katramiz, T., Shimizu, H., Kawakubo, S., & Kataoka, Y. (2021). SDGs mainstreaming at the local level: Case studies from Japan. Sustainability Science, 16, 1539–1562. Masuhara, N., Iwami, A., & Matsui, T. (2019). Local initiatives and issues towards achieving sustainable development goals: Trends. 2019 Conference on Environmental Information Science, 33, 43–48. Mazur-Wierzbicka, E. (2021). Circular economy: Advancement of European Union countries. Environmental Sciences Europe, 33, 111. Accessed June 21, 2022, from https://enveurope.springeropen. com/track/pdf/10.1186/s12302-021-00549-0.pdf

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Morita, K., Okitasari, M., & Masuda, H. (2019). Analysis of national and local governance systems to achieve the sustainable development goals: Case studies of Japan and Indonesia. Sustainability Science, 15(1), 179–202. Silander, D. (2022). The European Commission on Sustainable Development. A new normative power in its making? Forum for Social Economics. Accessed June 21, 2022, from. https://doi.org/10.1080/ 07360932.2022.2032255 United Nations General Assembly. (2015). Transforming our world: The 2030 agenda for sustainable development. Accessed June 21, 2022, from https://www.unfpa.org/resources/transforming-ourworld-2030-agenda-sustainable-development

Protecting Social Rights in an Era of Economic Change Agnessa O. Inshakova , Denis A. Gugunskiy and Alexander M. Solntsev

Abstract

The concept of family in Russian legislation unambiguously implies the union of a man and a woman; other forms of unions are not implied. This paper analyzes the arguments of the ECHR and draws general conclusions. The authors show that the ECHR is pushing Russia to take measures against the Constitution, law enforcement practice, public opinion, and the position of the main religion in the country (the Russian Orthodox Church). The issue is relevant for other State parties because the ECHR already considers similar cases in relation to Poland and Romania.

, Maria A. Simonova

,

Science defines the family in different ways. However, the main criteria that allow a social group to be classified as a family are the relations of marriage, kinship, the properties of group members, and their joint residence (Abashidze et al., 2021; Filippov, 2016). We will get the following definition— this is “a voluntary equal union of a man and a woman, a conclusion in the registry office”. In our opinion, this is exclusively the policy of some countries in Europe and America, and they cannot impose it on other countries (Presidential Executive Office, 2007). There are currently no international treaties that contain obligations for countries to promote the idea of supporting and recognizing unions (Hayward, 2016).

Keywords

Family · Same-sex unions · Religion · Russian Orthodox Church · Fedotova v. Russia case

JEL Codes

K33 · K38

1

Introduction

Throughout the history of humankind, people have lived and live in certain groups. These groups are formed according to different criteria: kinship, joint studies, work, relationships of love and friendship, joint pastime, and residence. The family is such a group, being in which may not be connected with the person’s will (Ilyin, 2011). A. O. Inshakova (✉) Volgograd State University, Volgograd, Russia D. A. Gugunskiy · M. A. Simonova · A. M. Solntsev Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; [email protected]

2

Methodology

The Russian Orthodox Church also supports this approach (Russian Orthodox Church, 2008). Aware of the presence of homosexuals in society, the Russian Orthodox Church (ROC) does not support the idea of considering this a common norm of behavior; it is against the propaganda of homosexuality (RBC News, 2021). We also see certain trends in the world to impose on all countries the obligation to register same-sex unions along with the marriage of a man and a woman (Chueva, 2018). This happens, including through the ECHR, to which the Russian Federation is also a party.

3

Results

3.1

Analysis of the ECHR Practice

In this research, we want to show the evolution of the approaches of the ECHR: how in 12 years, the Court shifted from the search for consensus to the rigid imposition of one’s position on countries. The decision of June 24, 2010, did not recognize such a right but put it into legal practice. The Court

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_33

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found that “same-sex couples living together in a stable relationship have an exclusive ‘family life’. This case led the Austrian Parliament to pass the Achievement Act, which is the same-sex family of most marital rights (European Court of Human Rights, 2010). The conclusion of the ECHR in this case was then repeated in a number of decisions (“Vallianatos v. Greece”, (European Court of Human Rights, 2013), “Oliari v. Italy”, (European Court of Human Rights, 2015), “Novruk v. Russia” (European Court of Human Rights, 2016a)) and served as a milestone in the global discussion around the rights of same-sex families. Let us consider them in more detail. While no positive commitments emerged after the Austrian case mentioned above, the case “Vallianatos v. Greece” (2013) raised more problems. However, the Court tried to delineate the scope of the judgment to avoid any general conclusion. The plaintiffs pointed out that the new law 3719/2008 regulates only the unions of a man and a woman and therefore discriminates against them (European Court of Human Rights, 2013). After this case, much debate erupted about whether the decision imposed a general positive obligation and whether it could have consequences for other contracting countries that do not legally recognize same-sex relationships (European Court of Human Rights, 2015; Ragone & Volpe, 2016). A year later, when a same-sex couple was denied a residence permit for family reunification because they were not married; the ECHR evaded a clear answer again (European Court of Human Rights, 2016b) (see paragraph 94). Finally, on July 13, 2021, the ECHR, contrary to its previous practice, ruled in the case “Fedotova v. Russia” (European Court of Human Rights, 2021), finding that Russia prevented allowing same-sex couples to formally recognize their relationship in the form of marriage or any other form. The decision is, in fact, historic (whether we want it or not) because the ECHR has not previously spoken out on this issue so clearly (Matytsin, 2021). Thus, in 2010, three same-sex couples filed a complaint with the ECHR. They tried to register their relationship in the registry offices of Moscow and the Lipetsk Region but were denied. They then filed a lawsuit with the ECHR, complaining that they could not get married and thus obtain legal protection for their relationship. Despite this, the essence of the claim concerned the right to obtain recognition within the formal legal field, whether it be marriage or other forms (registered partnerships, etc.). They also failed to seek the expansion of certain legal rights associated with the status of partners, which the Court had already requested to expand in many other cases (European Court of Human Rights, 2010, 2021). In the case of “Fedotova v. Russia,” in fact, there were no recommendations from the Constitutional Court to the legislature. Moreover, in contrast to the Italian situation, the

A. O. Inshakova et al.

Russian government has provided evidence that public sentiment is growing against the sex unions (paragraph 35) (Constitutional Court of the Russian Federation, 2006). Regarding the protection of minors from homosexual propaganda, the Court simply considered this justification “irrelevant” (paragraph 53). Finally, it believes that the protection of traditional marriage is not in real danger because it will not prevent opposite-sex couples from marrying or enjoying its benefits. We should also mention that countries cannot rely on a margin of appreciation to evade a positive obligation.

4

Conclusion

Thus, this decision, taken unanimously by seven judges (including the judge from Russia), raises a number of questions. First, we have shown several flaws in the logic and reasoning of the ECHR, as well as a significant violation of the existing case law. Second, the ECHR is pushing Russia to take measures against the Constitution, law enforcement practice, public opinion, and the position of the main religion in the country—the Russian Orthodox Church. Third, the issue is relevant for other State parties because the ECHR already considers similar cases in relation to Poland and Romania. Acknowledgment The research has been supported by the Russian Foundation for Basic Research (RFBR) in the framework of science project No. 21-011-44210/21.

References Abashidze, A. K., Inshakova, A. O., Solntsev, A. M., & Gugunskiy, D. A. (2021). Socio-economic inequality as a barrier on the path of sustainable development: “Institutional traps” and perspectives of overcoming them. International Journal of Sociology and Social Policy, 41(1–2), 62–75. https://doi.org/10.1108/IJSSP-032020-0069 Chueva, D. I. (2018). Same-sex marriage in the US and Russia: Approaches to regulation through the prism of judicial interpretation. Comparative Constitutional Review, 27(3), 92–102. https://doi.org/ 10.21128/1812-7126-2018-3-92-102 Constitutional Court of the Russian Federation. (2006). Determination “On the refusal to accept for consideration the complaint of citizen E. Murzin on the violation of his constitutional rights by Paragraph 1 of Article 12 of the Family Code of the Russian Federation” (November 16, 2006 No. 496-O). St. Petersburg, Russia. Accessed March 21, 2022, from https://sudrf.cntd.ru/rospravo/document/ 902029324 European Court of Human Rights. (2010). Case of Schalk and Kopf v. Austria (application No. 30141/04, judgment June 24, 2010). Strasbourg, France. Accessed March 21, 2022, from https://hudoc. echr.coe.int/fre?i=001-99605 European Court of Human Rights. (2013). Case of Vallianatos and Others v. Greece (application No. 29381/09 and 32684/09, judgment

Protecting Social Rights in an Era of Economic Change November 7, 2013). Strasbourg, France. Accessed March 21, 2022, from https://hudoc.echr.coe.int/fre?i=001-128294 European Court of Human Rights. (2015). Case of Oliari and Others v. Italy (Applications nos. 18766/11 and 36030/11, judgment July 21, 2015). Strasbourg, France. Accessed March 21, 2022, from https://hudoc.echr.coe.int/fre?i=001-156265 European Court of Human Rights. (2016a). Case of Novruk and Others v. Russia (applications nos. 31039/11, 48511/11, 76810/12, 14618/ 13 and 13817/14, judgment March 15, 2016). Strasbourg, France. Accessed March 21, 2022, from https://hudoc.echr.coe.int/fre?i= 001-161379 European Court of Human Rights. (2016b). Case of Taddeucci and McCall v. Italy (application No. 51362/09, judgment June 30, 2016). Strasbourg, France. Accessed March 21, 2022, from https://hudoc.echr.coe.int/fre?i=001-164715 European Court of Human Rights. (2021). Case of Fedotova and Others v. Russia (applications nos. 40792/10, judgment July 13, 2021). Strasbourg, France. Accessed March 21, 2022, from https://hudoc. echr.coe.int/fre?i=001-211016 Filippov, S. A. (2016). The concept of “family” under Russian law. Bulletin of the Saratov State Law Academy, 3(110), 102–108.

187 Hayward, A. (2016). Same-sex registered partnerships – A right to be recognised? The Cambridge Law Journal, 75(1), 27–30. https://doi. org/10.1017/S0008197316000179 Ilyin, I. A. (2011). The path of spiritual renewal. Institute of Russian Civilization. Matytsin, D. E. (2021). Retail investment financing via remote digital computer algorithm. Legal Concept, 20(2), 150–158. https://doi.org/ 10.15688/lc.jvolsu.2021.2.20 Presidential Executive Office. (2007). Decree “On holding the Year of the Family in the Russian Federation” (June 14, 2007 No. 761). Moscow, Russia. Accessed March 21, 2022, from http://www. kremlin.ru/acts/bank/25641 Ragone, S., & Volpe, V. (2016). An emerging right to a “Gay” family life? The case Oliari v. Italy in a comparative perspective. German Law Journal, 17(3), 451–485. https://doi.org/10.1017/ S2071832200019830 RBC News. (2021, November 20). Patriarch Kirill ruled out the recognition of same-sex marriages. Accessed March 21, 2022, from https://www.rbc.ru/rbcfreenews/6198c93b9a7947033ccddbdc Russian Orthodox Church. (2008, June 9). Fundamentals of the social concept of the Russian Orthodox Church. Accessed March 21, 2022, from http://www.patriarchia.ru/db/text/419128.html

A Universal Human Rights Mechanism for the Protection or Revision of the Institution of Family in an Era of Economic Change Aslan Kh. Abashidze

and Vladimir M. Filippov

Abstract

JEL Codes

The paper examines the activities of the Human Rights Committee (HRC), created on the basis of the International Covenant on Civil and Political Rights (ICCPR), in relation to the protection of family, which, according to the ICCPR, is understood as a “natural and fundamental group unit of society.” The comprehensive analysis of the relevant provisions of general comments and concluding observations on the States parties’ reports to the ICCPR adopted by the HRC, and the comparative analysis of the activities of the Committee on Economic, Social, and Cultural Rights (CESCR), which monitors the implementation of the International Covenant on Economic, Social, and Cultural Rights (ICESCR) by the States parties, including the provision on the protection of family, reveals that the HRC deviates from the relevant ICCPR guidelines on family and goes beyond its competence. It is expressed in the attempt of the HRC to equate same-sex couples with the international legal status of the family and impose such a distorted understanding on those countries that adhere to traditional values, which include family based on marriage between a man and a woman, one of the main goals of which is the reproduction of generations.

K33 · K38

Keywords

The International Covenants on Human Rights · The Human Rights Committee (HRC) · Protection and assistance of family · Marriage · Same-sex couples

A. K. Abashidze (✉) · V. M. Filippov Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; v.fi[email protected]

1

Introduction

The current stage of global politics and the international legal order may be briefly described with the title of the 18th Annual Meeting of the Valdai Discussion Club held in October 2021—“Global Shake-Up” (Valdai Discussion Club, 2021). The occurring shake-up primarily affects the foundations of the international legal order established after World War II, the core of which is the universal United Nations (UN) system for maintaining peace and international security on a collective basis. Consequently, in the current circumstances, observing what is happening in inter-state relations, first of all among the permanent members of the UN Security Council, which have primary responsibility for peace at the global level, it is apparent that humanity has entered an era of tremendous change, which will certainly affect the international legal order, including the UN. In this situation, all key elements of the established order will face (or are already facing) the test of their durability and indispensability in the face of new challenges, as well as the flexibility to reform in a progressive direction. This fully applies to the established system of international protection of human rights, whose normative and conceptual foundation is provided by the UN Charter, according to which the UN promotes and member countries individually and collectively encourage “universal respect for and observance of human rights and fundamental freedoms” to create “conditions of stability and well-being which are necessary for peaceful and friendly relations among nations” (United Nations, 1945). The institutional core of the international human rights protection system is represented by the main UN bodies, which were reformed in the early twenty-first century. The

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_34

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normative basis of this system is represented by international human rights instruments, including the Universal Declaration of Human Rights (UDHR) and nine international human rights treaties.1 with optional protocols, based on which ten human rights treaty bodies (HRTBs) operate.2 The importance of HRTBs is precisely outlined in the Report of the UN High Commissioner for Human Rights, which presents them as mechanisms for “translating universal norms into social justice and individual well-being” (Pillay, 2012). Despite this appreciation of the role of HRTBs’ system in the UN, in 2014, an inter-state process was launched to improve the effectiveness of the system, primarily and predominantly by finding internal reserves of its capacity, “bearing in mind that these activities should fall under the provisions of the respective treaties, thus not creating new obligations for States parties” (Paragraph 9). In this context, we have analyzed the mandates of the Human Rights Committee (HRC), which monitors the implementation of the ICCPR (the Covenant) by the States parties (now 173) concerning the right to found a family (Article 23), whose protection has become an important issue at a time of heightened efforts at all levels of human rights work relating to “sexual orientation” and “gender identity.” This analysis is a multi-dimensional one, including in the context of what UNGA Resolution 68/268, quoted above, stated in Paragraph 9, that HRTBs, within their respective mandates, should “not create new obligations for States parties,” i.e., not engage in activities which, in our case, are not within the mandate of the HRC.

1

The International Convention on the Elimination of All Forms of Racial Discrimination, 1965; the International Covenant on Civil and Political Rights, 1966; the International Covenant on Economic, Social and Cultural Rights, 1966; the Convention on the Elimination of All Forms of Discrimination Against Women, 1979; the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, 1984; the Convention on the Rights of the Child, 1989; the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, 1990; the International Convention for the Protection of All Persons from Enforced Disappearance, 2006; the Convention on the Rights of Persons with Disabilities, 2006. 2 The Committee on the Elimination of Racial Discrimination (CERD); the Committee on Economic, Social and Cultural Rights (CESCR); the Human Rights Committee (HRC); the Committee on the Elimination of Discrimination against Women (CEDAW); the Committee against Torture (CAT); the Committee on the Rights of the Child (CRC); the Committee on Migrant Workers (CMW); the Subcommittee on Prevention of Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (SPT); the Committee on the Rights of Persons with Disabilities (CRPD); the Committee on Enforced Disappearances (CED).

A. K. Abashidze and V. M. Filippov

2

Materials and Method

This research is based on a combination of general scientific methods and approaches, as well as special scientific methods of systemic and logical study. In other words, the authors applied the methods of deduction, induction, and dialectical analysis. Additionally, systemic, structural, historical-legal, and comparative methods have been used to investigate the subject and reach the following results.

3

Results

At the beginning of the analysis, let us clarify some general points about the normative international human rights fundamentals. Based on the relevant provisions of the UN Charter, the UDHR was adopted in 1948, which enshrined the so-called “list” of fundamental human rights and freedoms in the form of civil (individual), political, economic, social, and cultural rights (Abashidze et al., 2021) that were later enshrined in the two 1966 International Covenants on Human Rights—the ICESCR (UN General Assembly, 1966, p. 9) and the ICCPR (UN General Assembly, 1966, p 23). These Covenants, which, together with the UDHR, form the International Bill of Human Rights, have formed the basis of several binding international treaties covering a wide range of human rights issues. These international treaties enshrine fundamental norms that have inspired more than a hundred human rights conventions and declarations. Among HRTBs, there are nine classified by the Office of the UN High Commissioner for Human Rights (OHCHR) as “the core,” which, together with their optional protocols, form the basis of HRTBs, including the HRC, which is responsible for overseeing the implementation of the ICCPR, including article 23 concerning the family institution. Among the six constituent parts of the ICCPR, Part III forms “the core” of the Covenant: it enshrines substantive individual rights. Part IV establishes the HRC, defines its supervisory functions, and regulates technical and procedural matters. The HRC consists of 18 experts. In carrying out its functions, the HRC has the following duties: examining reports from States parties; preparing general comments; receiving individual communications (complaints) under the Optional Protocol. Turning to the focused analysis, two circumstances need to be highlighted: the provisions on the family, which were enshrined in the UDHR (Article 16), the ICCPR (Article 23), and the ICESCR (Article 10). It should be considered that the relevant committees—the HRC and the CESCR—on the one

A Universal Human Rights Mechanism for the Protection or Revision of the Institution. . .

hand, should remember that their activities must be, as stated in Paragraph 9 of UNGA Resolution 68/268, consistent with the provisions of the Covenants (implying that their activities should be distinct) and, on the other hand, these committees should seek to respect and protect as adequately as possible the common core elements of the family as reflected as “natural” in the Covenants. This includes the need for HRTBs to develop “an aligned consultation process,” as stated in Paragraph 14 of UNGA resolution 68/268, or “to accelerating the harmonization” of the TB system, as stated in Paragraph 38 of the Resolution. A comprehensive comparative analysis of these and related issues is envisaged in this study. However, it is necessary to highlight that the activities of another committee, the CESCR, which has international scrutiny under the ICESCR, including under Article 10 of this Covenant, will only be addressed comparatively by borrowing from relevant material already published as a separate academic article (Abashidze, 2021). It should also be stressed that the aforementioned academic article also facilitates our task of examining the relevant General Comments already adopted by the HRC concerning aspects of the family under Article 23 of the ICCPR. We begin the study by outlining the provisions of Article 23 of the ICCPR. It consists of four paragraphs. Under paragraph 1, “the family is the natural and fundamental group unit of society and is entitled to protection by society and the State.” The main elements of the family are fixed in paragraphs 2–3. The construction of paragraph 2 indicates that marriage is between a man and a woman and that the family is based on marriage, which is recognized as a human right. This understanding is also confirmed by the recent trend in some countries to add and clarify at the constitutional or legislative level that marriage is a union between a man and a woman. Paragraph 3 enshrines that marriage shall be free and based on full consent. Paragraph 4 imposes an obligation on the country to ensure equality between spouses. As we have noted, against the background of the key provisions outlined in Article 23 of the ICCPR, there is no formally agreed definition of “family” there, nor of the Covenant as a whole. Nevertheless, as already noted, the four paragraphs in this article specify the key components of the family as a natural unit. Additionally, it is necessary to mention Article 17 of the Covenant, which prohibits arbitrary interference with “family life,” and Article 24, which protects the rights of the child as “a family member,” over which the HRC exercises international control. In analyzing the relevant General Comments of the HRC explaining particular provisions of Article 23 of the ICCPR, we will attempt to set them out in a concentrated way,

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drawing on material we have already published (Abashidze, 2021). In its General Comment No. 19, adopted in 1990 (UN Human Rights Committee, 1990), the HRC notes what we consider to be an important conceptual fact: the concept of family may differ in certain respects from country to country and within a single country, making it difficult to arrive at a coherent definition of the family. However, the HRC warns that when national law defines the family, the country concerned must protect it. In those States parties in which there are such family categories as “unmarried couples, their children” or “single parents and their children,” countries must inform in their periodic reports whether and to what extent they are recognized and protected. To clarify, “married couples” here refer to a man and a woman. It should also be noted that the HRC in this document focuses on clarifying those provisions that relate to the protection of the family by the country. This is because the State party is obliged to adopt relevant measures (Article 23, ICCPR). The HRC underlined the importance of reporting on restrictions on the exercise of the right to marriage. The HRC has specified that the age for marriage for men and women must be such that their consent is considered “free,” “full,” and “personal.” The Committee considers that the right to freedom of conscience and religion requires that both kinds of marriage must be provided for in national law. In our view, an extremely important clarification by the HRC is that the right to found a family “implies the possibility to procreate,” which is possible by nature for men and women, and, conversely, which “same-sex couples” are not able to do. The Committee considers that equality of rights and obligations between spouses extends to matters such as “choice of residence,” “housekeeping,” “education and upbringing of children,” and “disposition of property.” As one may note, in 1990, when General Comment 19 on the clarification of Article 23 of the ICCPR was adopted, there were no issues, much fewer concerns, for the HRC regarding “sexual orientation” or “gender identity” in the context of implementing Article 23 of the ICCPR on the family. Having this in mind, we next seek to examine the HRC’s position over the period (2016–2019) as reflected in the concluding observations on the periodic reports of the State party to the ICCPR. In this regard, we note that the concluding observations from this period almost invariably include a section on discrimination on the grounds of sexual orientation and gender identity. Regarding the content of these sections, let us begin by analyzing the provisions of the Concluding Observations (COBs) on the fourth periodic report of the Czech Republic. The Committee expressed

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concern that the Registered Partnership Act prohibits persons in a registered partnership from adopting children. Additionally, the Committee expressed indignation at the fact that this provision is still retained in the Act, despite a Constitutional Court ruling that the provision is unconstitutional. Thus, it transpired that the Committee was unwilling to await the outcome of the deliberative process at the time of the “same-sex marriage bill” and did not catch the ultimate objective of that process: the conversion of same-sex couples from a “registered” status to a “same-sex marriage.” Another circumstance that the HRC deplores in relation to this country is the requirement in current law that transgender persons must undergo compulsory sterilization as a precondition for legal recognition of their gender. The HRC cites the 2018 decision of the European Committee of Social Rights in the case of Transgender Europe and ILGA-Europe v. the Czech Republic (European Committee of Social Rights, 2015) as grounds for repealing this provision of the law. The reference of the HRC, which is a body at the universal level, to the decision of a regional body (which is the European Committee of Social Rights), which belongs to non-core bodies (what is the CESCR at the universal level), and the position of this regional non-core human rights body as “justification” for the “concerns” of the HRC, in our view, is an example of the Committee’s rejection of such principles as universal jurisdiction, the priority of international commitments made on the basis of the UN Charter (Article 103) and the commitments made by a UN member State under other international treaties and the hierarchy of sources of international law. In this context, the HRC could also consider the legal position of another regional body—the European Court of Human Rights, which stipulates that the interpretation of the Convention for the Protection of Human Rights and Fundamental Freedoms of 1950 should be made in systemic unity with the other international treaty obligations of the State (Harris et al., 2018). Unfortunately, the HRC does not limit its “concern” to this: it is also “concerned” about the requirement of the national law of a country to have a psychiatric diagnosis as a precondition for the legal recognition of gender. The prescriptive nature of the HRC’s “recommendations” in Paragraph 13, addressed to the Czech government, is also noteworthy: “should review” relevant legislation to fully ensure “equal treatment of same-sex couples,” including by “considering recognizing their right to joint adoption of children”; “eliminate abusive requirements” for legal gender recognition, including mandatory sterilization and psychiatric diagnosis, and “provide for and implement. . . the gender recognition procedure. . . on the basis of self-identification by the applicant” (UN Human Rights Committee, 2019a). In the absence of the second periodic report, the HRC in the COBs on Nigeria expressed concern that the Criminal

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Code criminalized same-sex relationships between consenting adults, and the Same-Sex Marriage (Prohibition) Act provided for 14 years imprisonment for persons who enter into same-sex unions and a ten-year prison sentence for all persons who support groups advocating for LGBTI rights, hold meetings, and form such groups. The directive language style is also in the “recommendations” addressed to the sovereign state: “The State party should decriminalize. . . same-sex relationships. . . and ensure that arrest, prosecution and punishment. . . are prohibited”; “It should consider repealing the Same Sex Marriage (Prohibition) Act and reviewing all other relevant legislation. Pending such revisions, those measures should not be employed” (UN Human Rights Committee, 2019b). In the COBs on Vietnam’s third periodic report, in which the relevant section is even more ambiguous (“Sexual orientation, gender identity, intersex status...”), the HRC “welcomes” the State party’s efforts to improve the situation of LGBTI persons, including by repealing the ban on “samesex marriage” and providing legal recognition of gender. However, the HRC found grounds for “concern” about the “absence of legal recognition and protection for same-sex couples” (UN Human Rights Committee, 2019c). The COBs on Sudan’s fifth periodic report are notable. Based on the two positions expressed by the HRC, which indicate a logical inconsistency: under “Polygamy,” the HRC assesses the practice as “incompatible” with the principle of equality between men and women in terms of the right to marry, as it “violated the dignity of women,” and yet under “Non-discrimination” the HRC is “concerned” about the existence of “entrenched” discriminatory provisions in legislation. . . in the area of family and personal status, and concerning sexual orientation. It appears that the HRC sees the former as an affront to the dignity of women and the latter as not; indeed, in the latter case, the HRC requires the State party to “guarantee” same-sex consensual sexual activity the “protection” and “repeal” relevant articles in the Criminal Code (UN Human Rights Committee, 2018a). In the COBs on the report of Bulgaria, the HRC expresses “concern” that “same-sex couples cannot enter into any form of legally recognized union or adopt children...”. The Committee is also “concerned” about obstacles to legal recognition of gender reassignment, including “reports” that the basis for such reassignment to be recognized by the courts is only the completion of hormonal therapy. As “recommendations,” the HRC demands the elimination of de jure and de facto discrimination against persons on the basis of their sexual orientation and gender identity “in marriage and family arrangements” (UN Human Rights Committee, 2018b). In the COBs of Lithuania’s fourth periodic report, the HRC is “concerned” about many circumstances regarding:

A Universal Human Rights Mechanism for the Protection or Revision of the Institution. . .

• “The persistence of stereotypical attitudes, prejudice, hostility, and discrimination” against LGBTI persons; • “That certain legal instruments, such as the Law on the Protection of Minors against the Detrimental Effect of Public Information, may be applied, including by the Office of the Inspector of Journalist Ethics, to restrict media and other content in a manner that unduly restrict freedom of expression” against LGBTI persons; • “Various legislative initiatives” that would restrict the enjoyment of LGBTI rights; • “The lack of clarity in legislation and procedures concerning the change of civil status with respect to gender identity, in particular, the absence of legislation enabling gender reassignment procedures and change of civil status without undergoing gender reassignment surgery.” As a “recommendation,” the Lithuanian government is instructed to change legislation to recognize the equality of same-sex couples (UN Human Rights Committee, 2018c). The HRC has often used the phrase as a call for a State party to act “in accordance with the rights guaranteed under the Covenant,” but in practice understood by the Committee rather than by States parties. In the COBs on Liberia’s initial report, the HRC is “concerned” about the “criminalization of consensual samesex conduct between consenting adults” and “attempts to increase penalties and prohibit same-sex marriage”; “reports of harassment and reprisals against defenders and associations” advocating for LGBTI “rights” and “interests.” Particular attention should be paid to the reasoning behind the State party’s recommendations: “While acknowledging the diversity of morality and cultures internationally, the Committee recalls that State laws and practices must always conform to the principles of universality of human rights and non-discrimination.” As a “universal” right, the HRC presents the following: the State party should “as a matter of priority, decriminalize consensual same-sex sexual conduct between consenting adults.” This “justification” results in its “recommendations” and in effect dictates to the State party: to “remove any barriers” to the enjoyment of the rights of LGBTI persons; to “guarantee in practice the security” and “rights” and “interests” of LGBTI persons, human rights defenders, and organizations to “freedom of expression.” Moreover, the HRC calls on the State party to facilitate victims’ access to justice “by strengthening trust” between LGBTI persons and “State authorities” (UN Human Rights Committee, 2018d). In the COBs on the fifth report of Mauritius, the HRC expressed its “concern” that LGBTI persons “are not authorized to officially enter marriage or civil partnerships and are denied other rights relating to personal status.” The

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HRC called to prevent and protect LGBTI from all forms of discrimination and made the appropriate amendments to the legislation. The State party is also charged with training police, judges, and prosecutors and with conducting awareness-raising campaigns for the general public on the rights of LGBTI. As we can see, the HRC equates “civil partnership” with “marriage,” and based on the failure to allow “formal” same-sex unions in that country, the Committee qualifies “discrimination” on the basis of sexual orientation and gender identity and calls on the State party to take the necessary measures to eradicate discrimination against LGBTI persons “concerning marriage” (UN Human Rights Committee, 2017a). In this case, the allegations are unfounded from the perspective of international human rights law and attempts to substitute concepts. The Committee notes the satisfaction of the Committee with the jurisprudence of the Constitutional Court in relation to the seventh periodic report of Colombia, which guarantees the rights of same-sex couples to “enter into civil marriage and to adopt children” and reinforces the fight against the practice of discrimination against such persons. However, the Committee is “concerned” at “reports” that LGBTI persons “have been the target of acts of violence, including murder, and police misconduct because of their sexual orientation.” Thus, there is the following “recommendation”: the State party “should adopt stronger measures to prevent members of the security forces from committing acts of discrimination” (UN Human Rights Committee, 2016a). The HRC in the COBs for Slovenia’s third periodic report expressed “concern” about the amendments to the legislation (namely, granting, on an equal basis, the rights of same-sex couples to inherit, access reproductive treatments, and adopt children) were rejected. In the HRC’s view, the people’s refusal by referendum to accept the proposed amendments to Slovenia—Marriage and Family Relations Act is unconstitutional. Based on this, the Committee’s recommendation is as follows: “the State party should ensure” that all LGBTI persons “are guaranteed equal rights under the Covenant and the Constitution” (UN Human Rights Committee, 2016b). It appears that the HRC does not recognize the right of the people (i.e., the source of power) to change by referendum not only the relevant provision of existing law (in our case, Slovenia—Marriage and Family Relations Act) but also the Constitution itself, which is entirely inherent in the nature of the power of the people (democracy). In the COBs for Australia’s sixth periodic report, the HRC clearly disregarded the recommended length limits in the COBs, focusing excessively on issues related to sexual orientation and intersex status. The Committee has primarily expressed its dissatisfaction with the procedure for prescribing second-stage hormone therapy to young people diagnosed with gender dysphoria, which requires permission

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from the family court. The Committee sees the delay and costs in this procedure of obtaining court permission to do so. Another concern of the HRC is that, in most states, transgender persons are required to consent to appropriate surgical or medical intervention and be unmarried to change the legal gender record on key documents. In this regard, the HRC “recommends” that the State party expedite access to second-stage hormone therapy for persons with gender dysphoria, including “by removing the need for court authorization” with the consent of the child’s parents and medical team and provided that treatment is provided in accordance with medical protocols and standards of care. This position by the HRC is surprising because it requires the removal of judicial safeguards, which are considered to be the most effective of other legal remedies. Another recommendation of the HRC is for the State party to take the steps necessary “to remove surgery and marital status requirements for a sex change on birth, death and marriage certificates. . .”. Again, we are dealing with a position of the HRC which is at odds with the understanding of “gender” of the LGBTI advocates themselves, as will be discussed in more detail later. In this case, the logic of the HRC is that the person concerned can legally change in terms of gender without changing gender itself through surgery. If this approach is used in practice, then, for example, many forms of the Olympics could disappear because men who pay lip service to be women could compete for Olympic medals against women. Unfortunately, this process has already been noticed in the sports life of the USA. The HRC pointed out the main reason for its “concern” about the “explicit ban on same-sex marriage in the Marriage Act 1961,” which, in the Committee’s view, “results in discriminatory treatment of same-sex couples, including in matters relating to divorce of couples who married overseas.” Again, the Committee ignored the “postal survey” organized by the State party as a legitimate means of gaining public opinion on the “legalization of same-sex marriage.” On the contrary, the Committee considers that “resort to public opinion polls to facilitate upholding rights under the Covenant in general, and equality and non-discrimination of minority groups in particular, is not an acceptable decision-making method and that such an approach risks further marginalizing and stigmatizing members of minority groups.” The HRC recommended that the State party revise its laws to ensure that all its laws and policies afford equal protection for same-sex couples (UN Human Rights Committee, 2017b). In this context, one wonders what the qualifications of the HRC would be if the issue of the democratization and legitimacy of the postal vote in the last US presidential election were on its agenda. Our analysis of the relevant COBs clearly demonstrates the increasing activism of the HRC in relation to LGBTI issues and its desire to “expand” the scope of article 23 of the ICCPR. The HRC has used various techniques to

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“justify” this position, including reference to the documents of a regional body such as the European Committee of Social Rights. Logically, the HRC should have looked first to the relevant work of its “sister body,” the CESCR, which also deals with the family based on Article 10 of the ICESCR. With regard to the latter, as noted above, we will summarize some of the conclusions derived from the analysis of the CESCR in its consideration of the reports of States parties to the ICESCR. The analysis of the recommendations made over the last four years (2017–2020) in its concluding observations on the reports of 22 States parties (representing all geographical regions and subregions of the world) clearly shows what aspects are key for the CESCR in protecting the family. These include gender equality, family members, family planning, family life, family dependents, marriage, religious marriage, civil marriage, early marriage, marriage age, divorce, spouses, matrimonial property, inheritance, unmarried couples, separation, protection of family and child benefits and mothers’ welfare, maternity and pregnancy, paid leave, abortion, children, best interests principle, children born out of wedlock, foster children, child education and upbringing, children with disabilities, children of migrants, forced labor or exploitation of children, child custody, alimony, parental rights and responsibilities, child visitation, victims of domestic violence, etc. (Abashidze, 2021). If one compares the activities of the HRC and the CESCR, up until the first decade of the twenty-first century, these committees did not touch the obligation of States parties to take measures to equate same-sex couples with the institution of the family. More recently, the HRC has been active in this regard, while the CESCR has distinguished itself only once in relation to Slovakia. In Paragraphs 14 and 15 of the concluding observations on Slovakia’s periodic report, the CESCR began to speak in the same terms of “partnership,” “civil union,” “same-sex marriage,” and “same-sex unions.” In this context, the Committee has also raised concerns about “discrimination based on . . . sexual orientation.” In other words, the CESCR has created a “construct” of different unions: married and unmarried, while using them separately: “same-sex union,” “same-sex marriage,” and “registered partnership.” Based on such a “construction” and in the absence of any legal basis, and outside its competence, the CESCR recommended Slovakia to make legislation for the registration of same-sex partnerships or civil unions (UN Human Rights Committee, 2019d). This position taken by the CESCR in relation to Slovakia is fundamentally different from its previous practice; this case rather points to the “external” influence of its “sister,” the HRC, and the latter (the HRC) is unfortunately not reciprocated by its “sister,” the CESCR: it prefers to focus on the European Committee on Social Rights. Against this background, the origins of the human rights aspects of “gender identity” need to be clarified.

A Universal Human Rights Mechanism for the Protection or Revision of the Institution. . .

At a doctrinal level, it is argued that the concept of “gender identity” was first introduced into scholarship by the psychoanalyst Robert Stoller, speaking at the International Congress of Psychoanalysts in Stockholm in 1963. His concept was based on the separation of biological and cultural. He proposed a distinction between sex, gender, and the core of the generic essence: • He referred “sex” to biology, which required analysis of the chromosomes of the external and internal genital organs, the sex glands, the ratio of hormones, and internal sex characteristics; • “Gender” implied certain psychological and cultural aspects; • “Generic essence” came from an understanding of belonging to one sex and not to another: “core generic essence” meant the conviction that one had correctly identified one’s sex (Badenter, 1995). International documents and the approaches of UN specialized agencies, such as WHO and UNESCO, do not provide an explicit answer with regard to the concepts of “gender” and “gender-based.” For instance, Paragraph 2 of the Annex to the Beijing Platform for Action adopted during the Fourth World Conference on Women in 1995, which states that the word “gender” is used and understood in its customary accepted meaning, has no theoretical and even less practical significance for the simple reason that there is no explanation of these concepts in their customary accepted meaning. According to the WHO Director-General’s Statement on Gender Policy, the terms “gender” and “gender-based” are used to describe those characteristics of women and men that are “socially acquired,” and sex is “biologically predetermined” (Matytsin, 2021). Within UNESCO, the preferred term is “gender,” a framework that encompasses the roles and responsibilities of men and women that are defined in families, society, and culture. In the Statute of the International Criminal Court (ICC), according to Paragraph 7, the term “gender” in the context of society refers to both genders, male and female (International Criminal Court, 1998). The position of the UN International Law Commission (ILC), which deals with the progressive development and the codification of international law at the UN under the auspices of the UNGA, on the one hand, recommended that the UNGA should not be guided by the ICC Statute’s outdated understanding of “gender” and, on the other, is itself guided on this issue by the 2004 ICRC Guidelines, according to which “gender” refers to culturally determined expectations of male and female behavior based on the roles and attitudes assigned to them based on gender (Curtet et al., 2004).

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One may see, with this attitude to “gender” and “genderbased” aspects, it is difficult to understand the so-called essential foundations and dimensions of “gender identity” in a human rights context. In 2010, the Committee on the Elimination of Discrimination against Women (CEDAW), which oversees the international implementation by States parties of the 1979 International Convention on the Elimination of Discrimination against Women, issued General Recommendation 28, which in Paragraph 5 refers “gender” to “socially constructed identities, attributes and roles for women and men and society’s social and cultural meaning for these biological differences” (UN Committee on the Elimination of Discrimination against Women, 2010). “Gender identity” can be described as “a person’s deeply felt individual experience of gender, which may or may not correspond with the sex assigned at birth, and includes the personal sense of the body and other expressions of gender (that is, “gender expression”) such as dress, speech, and mannerisms” (Council of Europe, 2011). Against this background, a reasonable question arises: “What is common between the international legal framework protecting the family based on marriage between a man and a woman and the attempt to grant same-sex registered couples the legal status of a family?” The answer is unequivocal— there is little in common. For this reason, the position of the HRC in promoting the equation of the two antipodes—the biological and psychological products of families and samesex registered couples—is unconvincing and unwarranted. The question of the perspective of the situation and its negative impact on the international cooperation of countries in the field of human rights protection should also be answered. In this case, we can agree with the opinion of the President of Russia: “Any attempts to force one’s values on others . . . can only further complicate a dramatic situation. We have a different viewpoint, dealing with “reverse discrimination” against the majority in the interests of a minority and the demand to give up the traditional notions of mother, father, family, and gender” (Valdai Discussion Club, 2021). Going back to the core issue—the work of the HRC, one can see that the Committee avoids touching on the key provisions of the ICCPR, which sets out those foundations that characterize the family as a natural entity. To “overcome” these natural barriers, a discussion is sparked about the need for a comprehensive (overarching) antidiscrimination law (or legislation) in the State. This ignores the fact that all fundamental instruments, from the UN Charter and UDHR to the conventions on certain categories or issues, list “sex” among discriminatory grounds and all relevant provisions ending with “in other circumstances,” the general discourse of prohibiting all forms of discrimination is applied. On this basis, new rights of groups of people are “generalized” and then “justified,” with all the legal

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consequences that follow, including, for example, claims to those rights that the family has based on marriage between a man and a woman, such as the right to adoption. This is precisely what the UN States parties, which adopted Resolution 68/268, were warned against, that the work of the HRTBs “should fall under the provisions of the respective treaties” to “not creating new obligations for States parties.” In this context, it should be noted that even the European Court of Human Rights has been more cautious than the HRC in “unreasonably” extending the provisions on the right to marry and found a family in Article 12 of the Convention for the Protection of Human Rights and Fundamental Freedoms. As the individual cases confirm (K. M. v. UK, No. 30309/96, HUDOC (1997), DA; McMichael v. UK, A 308 (1995), 20 EMRR 205), “if a couple who is not married starts a family, the various rights they have will be protected by Article 8 of the Convention, not by Article 12” (UN Human Rights Committee, 2017b). As we can see, the ECHR relies on various articles of the Convention, even in cases of unmarried couples, without trying to equate their legal status.

4

Conclusion

We will focus on one academic event held four years ago, where this contradiction between the trends observed at the national level (in the case of the Russian Federation), the regional level (in the case of the Council of Europe), and the UN was clearly identified. We refer to the international conference “Constitution in the Age of Global Change and the Tasks of Constitutional Review,” which preceded the VIII St. Petersburg International Legal Forum. In his speech at the Forum, the Chairman of the Constitutional Court of the Russian Federation (the CC of the RF), Valery Zorkin, noted that the current era of major changes brings with it new and very serious challenges to constitutionally protected values. He, therefore, called for a balance of values to be struck to reconcile the changes to come with the legal traditions, which the public cannot abandon in favor of the new trends. The President of the Constitutional Court reminded his colleagues from the ECHR that the interaction between the European legal order and the constitutional one cannot take place in conditions of subordination. Therefore, only a dialogue between the different legal systems is the basis of their proper balance. It is on the respect of the European Court for the national constitutional identity of the Contracting States to the Convention that the effectiveness of its rules in the domestic legal order largely depends. He went on to clarify that the limits of a lawful compromise with the ECHR are delineated by the Russian Constitution. Addressing the question of the relationship between majority and minority rights from the perspective of constitutional justice, he emphasized that derogations from public

interests in favor of individual and private interests must always be compensated in one way or another and, conversely, any reduction in the scope of a fundamental individual right is secured by strengthening another, related right. Speaking at the same conference, Thomas Markert, secretary of the European Commission for Democracy through Law (Venice Committee), said that the ECHR should not dictate to national constitutional courts but that all national courts should respect the decisions of the ECHR. He pointed out, “There are no direct contradictions between the texts of the national constitution and international conventions,” the question is the interpretation of these acts. This was the circumstance to which Professor A. Kh. Abashidze drew attention in his speech. In particular, he noted that international human rights mechanisms often try to go beyond the relevant convention prescriptions, but the limits of such an escape are uncontrollable. This moves many issues out of the realm of law and into the realm of politics (Constitutional Court of the Russian Federation, 2018). We should underline the importance of the amendments to the Russian Constitution adopted on July 1, 2020, including Article 79: “Decisions of international bodies, taken on the basis of provisions of international treaties of the Russian Federation in their interpretation that contradicts the Constitution of the Russian Federation shall not be executed in the Russian Federation” (Russian Federation, 1993). If the HRC ignores this and continues along the same lines, we can also expect it to revise its own General Comment No. 19 of 1990, which acknowledges that the concept of family may differ in certain aspects from country to country. Instead, the HRC will establish “new rights” for same-sex registered couples and “new obligations” for the Contracting States to equate their legal status with that of the family. In this case, no one can predict the reactions of those States parties to the ICCPR who try to maintain a firm pillar of statehood—moral, ethical, and value-based. To confirm this point, we can mention the withdrawal of the Russian Federation from the Council of Europe. Acknowledgment The research has been supported by the Russian Foundation for Basic Research (RFBR) in the framework of science project No. 21-011-44210/21.

References Abashidze, A. K. (2021). Institution of family in the international bill of human rights: Its understanding and use. Sociopolitical Sciences, 11(4), 13–21. https://doi.org/10.33693/2223-0092-2021-11-4-13-21 Abashidze, A. K., Inshakova, A. O., Solntsev, A. M., & Gugunskiy, D. A. (2021). Socio-economic inequality as a barrier on the path of sustainable development: “Institutional traps” and perspectives of overcoming them. International Journal of Sociology and Social Policy, 41(1–2), 62–75. https://doi.org/10.1108/IJSSP-032020-0069

A Universal Human Rights Mechanism for the Protection or Revision of the Institution. . . Badenter, E. (Ed.). (1995). Male essence (Transl. from French). Novosti. Constitutional Court of the Russian Federation. (2018, May 15). Valery Zorkin: The Constitutional Court is ready to seek a lawful compromise with the ECHR. Accessed January 31, 2022, from http://ksrf.ru/ ru/Press-srv/Smi/Pages/ViewItem.aspx?ParamId=5689 Council of Europe. (2011). Discrimination on grounds of sexual orientation and gender identity in Europe (2nd ed.). Council of Europe Publishing. Accessed January 31, 2022, from https://www.coe.int/t/ Commissioner/Source/LGBT/LGBTStudy2011_en.pdf Curtet, C. L., Holst-Roness, F. T., & Anderson, L. (2004). Addressing the needs of women affected by armed conflict: An ICRC guidance document. ICRC. Accessed January 31, 2022, from https://www. icrc.org/en/doc/assets/files/other/icrc_002_0840_women_ guidance.pdf European Committee of Social Rights. (2015 September 9). Complaint No. 117/2015 “Transgender-Europe and ILGA-Europe v. Czech Republic.” Accessed January 30, 2022, from https://www.coe.int/ en/web/european-social-charter/processed-complaints/-/asset_pub lisher/5GEFkJmH2bYG/content/no-117-2015-transgender-europeand-ilga-europe-v-czech-republic?inheritRedirect=false Harris, D., O’Boyle, M., Bates, E., & Buckley, C. (Eds.). (2018). Harris, O’Boyle & Warbrick: Law of the European Convention on Human Rights. Oxford University Press. International Criminal Court. (1998). Rome Statute of the International Criminal Court (adopted by the United Nations Diplomatic Conference of Plenipotentiaries on the Establishment of an International Criminal Court on July 17, 1998). Rome, Italy. Accessed January 30, 2022, from https://www.icc-cpi.int/sites/default/files/RSEng.pdf Matytsin, D. E. (2021). Retail investment financing via remote digital computer algorithm. Legal Concept, 20(2), 150–158. https://doi.org/ 10.15688/lc.jvolsu.2021.2.20 Pillay, N. (2012). Strengthening the United Nations human rights treaty body system. A report of the United Nations High Commissioner for Human Rights. Office of the United Nations High Commissioner for Human Rights. Accessed January 27, 2022, from https://www. refworld.org/pdfid/4fe8291a2.pdf Russian Federation. (1993). Constitution of the Russian Federation (adopted by nationwide voting on December 12, 1993, with amendments approved by nationwide voting on July 7, 2020). Accessed January 27, 2022, from https://rm.coe.int/constitution-ofthe-russian-federation-en/1680a1a237 UN Committee on the Elimination of Discrimination against Women. (2010). General recommendation No. 28 on the core obligations of States parties under Article 2 of the Convention on the Elimination of All Forms of Discrimination against Women. Accessed January 31, 2022, from https://undocs.org/CEDAW/C/GC/28 UN General Assembly. (1966). International covenant on economic, social and cultural rights. (Adopted by Resolution 2200 A (XXI) on December 16, 1966). New York, NY. Accessed January 27, 2022, from https://www.ohchr.org/documents/publications/ coretreatiesen.pdf UN Human Rights Committee. (1990). General comment No. 19 on Article 23 of the International Covenant on Civil and Political Rights. Accessed January 30, 2022, from https://undocs.org/HRI/ GEN/1/Rev.9 (Vol. I).

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Trends of the Russian Labor Legislation Development in the Era of Great Challenges Tatyana Yu. Korshunova , Oksana V. Motsnaya , and Larisa V. Seregina

Abstract

Since the beginning of the 2000s, legal studies have been hopeful: “Is there a future for labor law in the twenty-first century?” The main “power and subordination” relationship characteristic of the use of non-self-employed labor was compensated by an increased level of guarantees for the employee, such as protection against not valid reasons for termination, the duration of the employment relationship, paid holidays for employees, payment for temporary disability, the use of employment opportunities for employees, etc. In turn, the employer assumed the risks of economic and entrepreneurial activity in exchange for economic stability. As a result of such regulation, labor began to be evaluated as one of the most expensive resources that increase the cost and reduce the employer’s profitability. In an effort to expand income and make more profits, employers have always looked for opportunities to use other ways to regulate the labor process. Keywords

Big challenges · Employee · Employer · Employment relationship · Labour law

JEL Codes

K31 · J24 · J41 · J46 · J48 · J62 · J81 · J83 · J88

1

Introduction

Recently, it has become apparent that the pace of digitalization is accelerating, expanding the range of social relations mediated by new technologies (Khabrieva, 2018; Khabrieva T. Y. Korshunova (✉) · O. V. Motsnaya · L. V. Seregina Institute of Legislation and Comparative Law under the Government of the Russian Federation, Moscow, Russia; [email protected]

& Tchernogor, 2018; Presidential Executive Office, 2016). Several levels of legal regulation can be distinguished (Inshakova, 2021; Inshakova et al., 2020b). The first one is the international level. The “Programme of cooperation between the Russian Federation and the International Labour Organization for 2021–2024” defined the basic priorities as follows: 1. Formation of a people-centered approach to the development of the world of work; 2. Strengthening social dialogue, developing systems of collective agreements and tripartite cooperation, and promoting international labor standards; 3. Expanding employment opportunities and increasing labor productivity. Modernization of labor legislation and the system of qualifications (International Labour Organization (ILO), 2022). The second is national level. The program (Presidium of the Council, 2018) provides for several packages of measures to improve labor legislation, including increasing labor productivity, supporting employment, clarifying qualification requirements for employees, considering advanced technologies, optimizing requirements for maintaining personnel records management, and increasing the minimum wage. Moreover, it implies strengthening these guarantees because, in itself, it is impossible without the creation of safe working conditions and decent wages (Antonova et al., 2022).

2

Materials and Methods

This research includes general (analysis) and special (sociological) methods that allow using an integrated approach to the declared topic. Materials on this topic are reflected in the works of Khabrieva (2018); Khabrieva and Tchernogor

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_35

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(2018); Inshakova et al. (2020b); Putilo et al. (2020); Ljutov and Vojtkovskaja (2020). Methods of scientific forecasting and analysis help maintain a balance of interests of the employee and the employer. These conclusions are primarily based on the works of Crouch (2020); Ljutov (2011); Korshunova (2020), Tchikanova (2021), Matytsin and Rusakova (2021); Antonova et al. (2022).

3

Results

3.1

The New Look at Labor Relations

Nowadays, in parallel with the existing mechanism for regulating labor relations, a system of atypical forms of employment has developed but not regulated by labor legislation (relations mediated by civil law contracts) and the activities based on an employment relationship, in which any of the essential (criteria) signs of an employment relationship is absent or modified: personal, organizational, or property (Motsnaja, 2009). Precarious work is also present in the Russian Federation but does not necessarily entail labor insecurity. For example, work under a fixed-term employment contract or part-time work, although it is a type of non-standard employment, has long been regulated by law: workers enjoy almost the full scope of guarantees, which allows us to talk about their social security (International Labour Office, 2017). These norms were subsequently supplemented and clarified by judicial practice, making it possible to speak of a sufficient level of protection for workers. Thus, with certain types of non-standard employment, employees have the opportunity to exercise the right to decent work (Korshunova, 2020; Tchikanova, 2021): to freely conclude an employment contract, receive information about working conditions and remuneration, enjoy the benefits and guarantees provided by law for employees, be a member of trade unions, etc. Precarious employment can be distinguished as a kind of non-standard employment, which includes new forms of involvement in labor, such as employment agencies or Internet platforms, on the basis of verbal agreements of the employee and employer without contracts, and selfemployment. It seems especially relevant now to justify the possibility of regulating work on the basis of Internet platforms by labor law because this type of employment actively replaces traditional labor relations and requires rethinking the conceptual provisions of labor law and social security law, changing the government’s approaches to employment and social protection issues (Inshakova et al., 2020a, 2020b; Putilo et al., 2020).

With this form of employment, the online platform is used to provide legal or natural persons—clients (customers) with access to an unlimited and unknown circle of other natural or legal persons—performers to solve specific problems or provide specialized services on a paid basis. The online platforms had the most significant impact on work that does not require special training and qualifications: the work of couriers, one-time services, etc. (Inshakova et al., 2020a, 2020b). Some researchers consider platform employment to be a perfect form of work, which gradually replaces the conditions of a traditional employment contract associated with higher costs for the employer (Matytsin & Rusakova, 2021). Employers can maximize flexibility by hiring and paying workers only when they need to perform specific tasks (avoiding social security contributions, minimum wage obligations, and many other obligations associated with the so-called standard (usual, traditional) employment). In turn, workers can enjoy the opportunity to be entrepreneurs, working when they want and for whom they want (Ljutov & Vojtkovskaja, 2020). That is, the main thesis of the traditional system of labor relations was questioned: freedom from the employer’s mastery of power turns into a rejection of the increased social protection of workers.

3.2

Remote Work

First, in accordance with Part 2 of Article 312.4, the mode of operation of a remote worker is set by workers themselves at their own discretion (Russian Federation, 2001). As is known, the right to establish the working hours of an employee is one of the fundamental rights of the employer, which establishes the non-independent or dependent nature of labor and requires special guarantees to compensate for this provision. In this regard, the situation in which the employer transfers this right to the employee requires certain regulations and appropriate legal justifications, which are not currently available. Second, the features of the interaction between the employer and the remote worker are not entirely clear: whether the parties can interact during the rest period of the remote worker, especially for those cases when the employee and the employer are in different time zones. Perhaps, when establishing the procedure for the interaction of the parties in internal documents, it should be determined whose “personal schedule” should be observed in this situation and, given the high degree of uncertainty about the remote worker’s location, the hours used by them should be based on the working hours of the employer’s office. Third, the question arises of how to calculate the working time of a remote worker. In some cases, employers can use special programs (e.g., StaffCop, ActivTrak, etc.) that allow

Trends of the Russian Labor Legislation Development in the Era of Great Challenges

them to control the actions of employees during working hours, check the files used, graphic applications, etc. Currently, the use of such programs is not regulated, but the employee must be informed of their use. Accordingly, the fact that the employer uses such programs should be enshrined in local regulations, which the employee gets acquainted with against signature (Inshakova, 2021; Russian Federation, 2001). Let us try to figure it out. If we are talking about a reduction in wages for an employee who performs a labor function remotely, then it is understood that labor relations with such an employee arose before the transition to remote work, and the employee performed their labor function at a stationary workplace for some time. By itself, a change in the method of organizing labor (namely, the method of organizing labor—the remote nature of the performance of a labor function) cannot affect the amount of wages. However, questions arise on a number of components of wages—particularly on compensation payments established to the employee in connection with the performance of work in conditions that deviate from normal. District coefficient and percentage wage increment may also be saved in respect of an employee who has switched to remote work only if the previously established condition of the labor contract on the performance of the labor function in the Far North and equivalent areas is retained. Moreover, the very possibility of an employee changing the locality (territory) of performing a labor function without notifying (and, in some cases, without obtaining the consent) the employer does not always find support even in the courts (Crouch, 2020).

3.3

Improvement of HR Requirements. E-Document Management

The purpose of the laws “Digital Economy of the Russian Federation” (Presidium of the Council, 2019) and “On amendments to the Labor Code of the Russian Federation” (November 22, 2021 No. 377-FZ) is to normatively consolidate the possibility and mechanisms for maintaining and applying work-related documents in electronic form (Russian Federation, 2021). Nowadays, there has already been a transition to electronic labor books (Russian Federation, 2001). As a result, any employee has the right, without contacting the employer, to obtain information about labor activity, which allows an employee to protect their rights effectively. Apparently, it is needed a deeper legal and technical expertise, especially in terms of its terminological intersection with other federal laws (Russian Federation, 2011).

3.4

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Labor Protection in the Context of Digitalization

The right to labor protection belongs to everyone, regardless of the chosen form of realization of their abilities for creative and productive work. The scientific literature has repeatedly drawn attention to the fact that, in some cases, in the implementation of employment with non-standard jobs or the organization of labor (home-based, remote, agency work, rotational expeditionary activities, etc.), which involves the performance of a labor function outside the employer’s entity and not under its constant control, it is impossible to fully extend the norms of labor legislation to such relations and ensure the right of citizens to labor protection (Belitskaja, 2019; Kashlakova, 2015; Ljutov, 2011). For example, telecommuting can reduce travel time to and from work, thereby reducing the associated stress and risk of work-related accidents and helping to achieve work-life balance. Simultaneously, such work has an impact on the ways people interact with each other; it blurs the line between work and the rest of life and, as a result, increases psychosocial risks due to the solitude of the employee, the inability to clearly distinguish between work, personal, and rest time, and ensure the ergonomics of the workplace.

4

Conclusion

Society and the country have entered an era of global challenges. Labor now is the subject of serious transformations, including those related to rethinking the key concepts that form the branch of labor law. Considering the analysis of existing concepts of labor relations, employee, and employer to adapt reality to high social standards and the purpose of the industry and relations we conclude: 1. For regulating platform employment, the resolution of emerging relationships can be approached from various points. The employment legislation should legalize the concept of a dependent self-employed person who will be given the opportunity to use a certain package of social guarantees, such as the right to rest, join trade unions, the minimum wage, pay for a period of temporary disability, leave in connection with the birth and upbringing of children, etc. 2. It is necessary to put the platforms that replace traditional employment within a certain legislative framework, equalizing it with other employers, which will improve the position of workers and promote fair competition.

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3. It is important to rethink the current legal provisions on remote work, in particular, the question of whether it is possible to change the species-forming condition of the employment contract. 4. Given the need to ensure labor protection for all workers, including remotely, by Internet platforms, and in other atypical forms of employment, we believe that the norms of the legislation on labor protection should develop towards expanding their scope to cover various categories of workers.

References Antonova, N. V., Pashentsev, D. A., & Kashevarova, Y. N. (2022). Legal mechanisms for protecting the rights of economic entities in the conditions of development penetrative technologies. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 111–120). Springer. https://doi.org/10.1007/978-981-164621-8_9 Belitskaja, I. Y. (2019). Remote work in Russia: Looking for a solution. Zakon [Law], 11, 57–65. Crouch, C. (2020). Will the gig-economy prevail? HSE Publishing House. Inshakova, A. O. (2021). Key directions of legal development of national priorities of international strategic partnership. Legal Concept, 20(4), 6–11. https://doi.org/10.15688/lc.jvolsu.2021.4.1 Inshakova, A. O., Frolova, E. E., Rusakova, E. P., & Galkina, M. V. (2020a). Development of social market economy under the influence of noneconomic factors: Modeling and regulation. International Journal of Sociology and Social Policy, 41(1–2), 239–252. https:// doi.org/10.1108/IJSSP-03-2020-0067 Inshakova, A. O., Frolova, E. E., Rusakova, E. P., & Kovalev, S. I. (2020b). The model оf distribution of human and machine labor at intellectual production in industry 4.0. Journal of Intellectual Capital, 21(4), 601–622. https://doi.org/10.1108/JIC-11-2019-0257 International Labour Office. (2017). Non-standard forms of employment. Analysis of problems and prospects for solutions in different countries. ILO. Accessed January 24, 2022, from https://unecon.ru/ sites/default/files/obzor_nestandartnye_formy_zanyatosti.pdf International Labour Organization (ILO). (2022). Programme of cooperation between the Russian Federation and the International Labour Organization for 2021–2024 (signed December 11, 2020). Moscow, Russia. Accessed January 20, 2022, from https://www.ilo. org/wcmsp5/groups/public/%2D%2D-ed_mas/%2D%2D-program/ documents/genericdocument/wcms_774553.pdf Kashlakova, A. S. (2015). Labor protection of workers in atypical forms of employment. Labor Law in Russia and Abroad, 1, 13–15. Khabrieva, T. Y. (2018). Law facing the challenges of digital reality. Journal of Russian Law, 9, 5–16. https://doi.org/10.12737/art_ 2018_9_1 Khabrieva, T. Y., & Tchernogor, N. N. (2018). Law in the conditions of digital reality. Journal of Russian Law, 1, 85–102. https://doi.org/10. 12737/art_2018_1_7

T. Y. Korshunova et al. Korshunova, T. Y. (2020). Problems of decent labour under atypical employment. Journal of Russian Law, 7, 78–97. https://doi.org/10. 12737/jrl.2020.082 Ljutov, N. L. (2011). International legal regulation of home work and telework. Kadrovik, 11, 10–15. Ljutov, N. L., & Vojtkovskaja, I. V. (2020). Taxi drivers performing work through online platforms: What are the legal consequences of the “uberization” of labor? Actual Problems of Russian Law, 15(6), 155–156. https://doi.org/10.17803/1994-1471.2020.115.6.149-159 Matytsin, D. E., & Rusakova, E. P. (2021). Strategy of quality management in industry 4.0 and formation of cognitive economy based on industrial and manufacturing engineering in The Russian Federation and countries of the EU. International Journal for Quality Research, 15(4), 1061–1080. https://doi.org/10.24874/IJQR15.04-03 Motsnaja, O. V. (2009). Atypical employment some problems of theory and practice (Dissertation of candidate of legal sciences). Institute of State and Law of RAS. Accessed January 20, 2022, from https:// www.dissercat.com/content/netipichnaya-trudovaya-zanyatostnekotorye-problemy-teorii-i-praktiki Presidential Executive Office. (2016). Strategy for the Scientific and Technological Development of the Russian Federation (approved by the Order of the President of the Russian Federation on 1 December 2016 No. 642). Moscow, Russia. Accessed January 20, 2022, from https://online.mai.ru/StrategySTD%20RF.pdf Presidium of the Council under the President of the Russian Federation for Strategic Development and National Projects. (2018). The National Program “Labor productivity and employment support” (approved by the minutes of the meeting of the Presidium of the Council under the President of the Russian Federation for Strategic Development and National Projects, dated December 24, 2018). Accessed January 20, 2022, from http://static.government.ru/ media/files/Ki3g5TzKdmVyX2ogBvNTIxH3BQ6YFADA.pdf Presidium of the Council under the President of the Russian Federation for Strategic Development and National Projects. (2019). The National Program “Digital Economy of the Russian Federation” (approved by the minutes of the meeting of the Presidium of the Council under the President of the Russian Federation for Strategic Development and National Projects dated June 4, 2019 No. 7). Moscow, Russia. Accessed January 20, 2022, from https://base. garant.ru/72296050/ Putilo, N. V., Volkova, N. S., & Antonova, N. V. (2020). Robotization in the area of labor and employment: On the verge of the fourth industrial revolution. In E. Popkova & B. Sergi (Eds.), Artificial intelligence: Anthropogenic nature vs. social origin (pp. 60–75). Springer. https://doi.org/10.1007/978-3-030-39319-9_7 Russian Federation. (2001). “Labor Code of the Russian Federation” (December 30, 2001 No. 197-FZ, as amended February 25, 2022). Moscow, Russia. Accessed January 20, 2022, from http://www. consultant.ru/document/cons_doc_law_34683/ Russian Federation. (2011). Federal Law “On electronic signature” (April 6, 2011 No. 63-FZ). Moscow, Russia. Accessed January 20, 2022, from https://www.consultant.ru/document/cons_doc_ LAW_112701/ Russian Federation. (2021). Federal law “On amendments to the Labor Code of the Russian Federation” (November 22, 2021 No. 377-FZ). Moscow, Russia. Accessed January 20, 2022, from https://base. garant.ru/403090504/ Tchikanova, L. A. (2021). Decent work: International and national approaches. Journal of Russian Law, 25(2), 73–81. https://doi.org/ 10.12737/jrl.2021.020

Impact of Customs and Tariff Regulation on Economic Security Aleksei M. Sorokin , Alexander L. Chupin Zhdanov , and Alex I. Ukhanov

, Olga A. Dmitrieva , Sergei P.

Abstract

JEL Codes

The paper aims to assess the effectiveness of the impact of customs and tariff regulation on individual indicators of economic security. The research is based on a comprehensive and systemic analysis and general scientific methods of knowledge—analysis, synthesis, dialectical method, systematization, classification, process and systemic approaches, and the method of comparison. The authors assess the state of Russia’s economic security in the benchmark years 2015 and 2019. It is shown that despite the positive dynamics of the value of many indicators, some of them, including those related to foreign economic activity, are outside the threshold values. The authors conducted a comparative-chronological analysis of the dynamics of foreign trade in certain categories of goods and changes in measures of customs and tariff regulation applied to them: import and export duties and changes in the classification and coding of goods, which increase the differentiation of the establishment of duty rates for similar goods. Economic security indicators affected by these changes are identified. The article was independently written by a team of authors. The theoretical basis of the research is based on the scientific works of Russian and foreign scientists. The statistical base of the research is represented by the official publications of the executive authorities.

E00 · E20 · F52 · F63

Keywords

Economic security · Customs and tariff regulation · Trade balance · Customs · Globalization

A. M. Sorokin (✉) · A. L. Chupin · O. A. Dmitrieva · A. I. Ukhanov Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; [email protected]; [email protected] S. P. Zhdanov Plekhanov Russian University of Economics, Moscow, Russia

1

Introduction

When the country carries out foreign trade, ensuring economic security is becoming increasingly important. Early identification of challenges and threats and prompt response to them will ensure the effective functioning of the economy and economic security. To assess the current state of the economy, the authors analyze the indicators presented in Table 1, which most reflect the level of the economy. To track the dynamics, the authors selected two years at four-year intervals—2015 and 2019. Thresholds are set by Russian and foreign scientists, who provide an expert assessment, applying various mathematical calculations and expert methods (Krivorotov et al., 2019; Nosov, 2019; Savkin, 2020). The index of the physical volume of GDP characterizes the rate of economic growth over a given period. It characterizes the output of goods in volume, not in monetary terms. This indicator exceeded the threshold value by two times in 2015 and 2019, which indicates the high performance of the country’s socio-economic system. The share of investment in fixed capital affects the development of the country’s economy. Investments are used to introduce new technologies in fixed capital, on the basis of which goods are produced. Investments provide an opportunity to improve the equipment, thereby upgrading the goods produced, resulting in an increase in profits of the enterprise. In 2015 and 2019, fixed investment as a percentage of GDP is half of the threshold, meaning that fixed capital is not fully funded, causing companies to face difficulties due to underinvestment, which results in a failure to earn the necessary minimums and gaps in the economy.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_36

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Table 1 Values of economic security indicators in 2015 and 2019 and their thresholds Indicator 1 Index of physical volume of GDP (% to the previous year) GDP per capita (at purchasing power parity) (current prices, USD) Share of investment in fixed capital in GDP (current prices, % to total) Degree of depreciation of fixed assets (at the end of the year, %) Index of industrial production (% to the previous year) Index of physical volume of export (% to the previous year) Index of physical volume of imports (% to the previous year) Index of production by type of economic activity “Extraction of minerals” (% to the previous year) Retail trade turnover (million rubles) Share of the working-age population in the total population (%) Share of citizens with income below the subsistence minimum (% of the total number) Share of machinery, equipment, and vehicles in total imports (%) Inflation rate (%) Balance of trade (million USD)

Actual data in 2015 3 98.0

Actual data in 2019 4 102.0

– Not less than 40% No more than 35% 105

24,059 20 48.8

29,440 20.6 51.3

100.2

103.3

–

103.7

100.7

–

75

103.4

100.1

101.3

103.4

– 60 No more than 7%

27,526,793.2 57.4 13.4

33,624,303.3 56.3 12.3

No more than 15% Up to 6% –

44.85

46.17

12.91 160,920

3 178,997

Threshold value 2 Not less than 50%

Source: Developed by the authors

The increased level of depreciation of fixed assets grows out of the insufficient share of investment in fixed capital in GDP. From 2010 to 2019, the depreciation of fixed assets in the Russian Federation has steadily increased and reached 51.3% by 2019, which is 5.6% higher than in 2010. Fixed assets are assets used by an organization for a long period (one year or more) in the production of goods or services or when lent to other organizations for the same purpose. Fixed assets partially or completely lose their consumer properties and their value over time. The index of industrial production plays an important role in investment. By analyzing the dynamics of the index, it is possible to assess the potential and prospects of investments because the investor will be able to see in what phase the index is now (decline or growth) and calculate the forecasts of industrial production. In 2015 and 2019, the index value was almost a threshold value; hence, there is potential to attract investment. The indices of the physical volume of exports and imports, reflecting the ratio of the volume of exports and imports of the current year to the previous year, should have an increasing dynamic because, with the growth of these indicators, the country has more revenue to the federal budget, replenished by customs authorities in the implementation of the fiscal function. From 2015 to 2019, retail trade turnover grew by more than 6 trillion rubles. Therefore, the national budget in 2019

received more money than in 2015. However, considering the growth of the physical volume of imports from 75% in 2015 to 103.4% in 2019, we can see that imported goods are more in demand. Thus, domestic products are not demanded by the population. As evidenced by the indicator “Share of machinery, equipment, and vehicles in total imports,” Russia is highly dependent on foreign supplies of machinery and equipment, as evidenced by the indicator. To even out the balance and reduce Russia’s dependence on supplies of machinery and equipment, their share should exceed 15% (Andronova, 2015). However, the actual values in 2015 and 2019 exceeded the threshold almost three times. In 2015 and 2019, Russia had more revenues in the budget than expenditures from it, as evidenced by the trade surplus. It is worth noting that imports of goods played a significant role in this indicator, which increased in 2019 (compared to 2015); the country is more interested in foreign products than domestic ones. Thus, we can conclude that all indicators of economic security are related to each other; one indicator affects the other. For example, when inflation rises, the key rate of the Central Bank of the Russian Federation rises; when the key rate rises, the volume of GDP falls. When looking at the indicators for 2015 and 2019, we can see that the indicators that depend on foreign conditions, supplies, investors, etc., have negative results, expressed in exceeding thresholds or,

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Table 2 Impact of the application of customs and tariff regulation measures on the share of goods in groups 84–90 of CN FEA of the EAEU in 2015 imports, thousand USD All products Groups 84–90 Share of groups 84–90 in the total volume of imports

H1 86,736,421.20 38,479,317.20 44.4%

H2 95,667,109.10 43,320,787.40 45.3%

Total in 2015 182,403,530.30 81,800,104.60 44.8%

Semiannual difference 8,930,687.90 4,841,470.20 54.2%

Source: Compiled by the authors based on Federal Customs Service of the Russian Federation (n.d.)

conversely, the value does not reach the required level. We also observe a low share of investment in fixed capital, high degree of depreciation of fixed assets, dependence on foreign supplies of machinery and equipment, and increasing demand for imported products and its decline in domestic goods.

2

Methodology

The theoretical basis of the research is grounded on the results of scientific research of the authors, who have also studied the relationship and the possibility of using customs and tariff regulation in the interests of economic security (Bogaturova, 2017; Pak, 2020; Rebrina & Silaeva, 2020; Severyanova, 2017; Shcheka, 2019). Despite substantial contributions, most studies are descriptive and reduced to theoretical calculations and logical models. This research tries to illustrate the real impact of earlier measures on economic security indicators. The research methodology consists of a chronological and temporal analysis of the impact of measures of customs and tariff regulation on economic security indicators. In the first stage, out of the entire array of indicators, the authors selected those related to foreign economic activity or its regulation. The second stage is represented by a generalized analysis of the dynamics and structure of Russia’s foreign trade (FT) in the considered period. The third stage collected and grouped changes in customs-tariff regulation by groups of goods that are significant in WTO according to the results of the second stage. In the final stage, the authors identify and illustrate the effects of customs-tariff regulation measures and evaluate their impact on some indicators of economic security. The “Results” section presents the conclusions of the last stage of the research.

3

Results

In 2015, by the Decisions of the Board and Council of the EEC, many codes of Commodity Nomenclature of foreigneconomic activity (CN FEA) were divided into two codes: one code retained the previous import rate, and the second code had a different rate from the original one, most often in the amount of 0%.

For example, “Aerospace equipment” code 8457 10 900 8 with a duty rate of 10%, 8458 11 200 0 with a duty rate of 7.50%, and others were split into two codes: 8457 10 900 3 and 8458 11 200 1 with a rate of 0% for the period from July 11, 2015, to the end of 2015, and 8457 10 900 9 with a rate of 10% and 8458 11 200 9 with a rate of 7.5% for an indefinite period. The division of one CN FEA of the EAEU code into several codes is associated with the need to attract certain equipment to the country. Nevertheless, it is impossible to completely waive the amounts of customs duty due to the fiscal function of the customs authorities. By separating the code, the country avoids the adulteration of goods, due to which the incomplete collection of customs duties is possible. Consequently, this division will affect such indicators of economic security as the index of industrial production, the degree of depreciation of fixed assets, the index of physical volume of imports, and the index of production by type of economic activity “Mining of minerals” when importing equipment involved in this area, then the share of machinery, equipment, and vehicles in total imports. In 2015, the decisions of the Board and the Council of the EEC applied measures of customs-tariff regulation, namely changes in the rates of import customs duties, to 16 CN FEA codes of group 84, 2 codes of groups 85 and 86, and 3 codes of group 89. The share resulting from the change in rates in 2015 for goods in groups 84–90 is presented in Table 2. Based on the measures of customs-tariff regulation taken in 2015 for the goods of groups 84–90, we can see that in the second half of the year, the volume of imports of goods from the taken groups increased in value terms; in the second half of the year, after the introduction of measures, import of goods of groups 84–90 was more than 50% relative to the first half, that is, more than half of all imported goods. The result is both positive and negative. A positive result is an increase in the amount of revenues to the federal budget by almost $5 billion. The increase in federal budget revenues is a positive result; due to the import of equipment, the population can produce new goods, resulting in an increase in the index of physical volume of GDP. A negative result is a fact that the increase in import of goods of groups 84–90 at the expense of reducing import duties increases the value of the economic security indicator “Share of machinery, equipment, and vehicles in total imports,” which, even without the

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introduction of duties exceeds the threshold value by almost three times. The decision of the Board of the EEC reduced the rates for raw materials of mineral origin containing precious metals from 12.5% and 15%, depending on the code, to 0%. It also extended the zero rates for waste and scrap of precious metals from January 1, 2017, until the end of 2019, and then for the period from 2020 to 2022. In 2018, zero rates for raw materials of mineral origin containing precious metals were again approved for the period from August 24, 2018, to June 30, 2020. It turns out that waste and scraps of precious metals are imported into the territory of the EAEU under four CN FEA codes of the EAEU at a rate of 0% from June 1, 2015, to the present time continuously. The decrease in rates affected the increase in imports of this group, but these measures only increased the index of “physical volume of imports.” Since the rates were reduced for raw materials, it proves that the country is dependent on foreign materials. However, due to an increase in imports of 71 groups, the processing of imported raw materials increases the indicator “retail turnover,” which results in the budget of the country receiving money from the sold final precious products. The second and third largest imports by value in 2015 and 2019 are goods in groups 01–24 and 28–40. However, despite the large volumes of imports of these goods, they are less actively applied to change the rates of import duties. Thus, from 2015, the EEC took the following decisions to the goods of groups 01–24: reduced rates for fish, fertilized fish roe agricultural products, cashew nuts, and cocoa products. Only agricultural products have upward changes in rates to restrict imports of cabbage, group 0704, nuts from group 0802, and fruits from groups 0804 and 0806. Changes in the rates for goods groups 01–24 affect the index of physical volume of imports, retail trade turnover, and the share of the working-age population in the total population. The index of the physical volume of imports can be calculated using the Laspeyres formula: Iq =

q1 p 0 q0 p0

ð1Þ

where: Iq—index of physical volume of imports; q1—volume of goods in the current year; q0—volume of goods in the base year; p0—price of goods in the base year. The index of the physical volume of imports is calculated for the country as a whole. However, there are many constituent links in the calculation, one of them being imports of goods

of groups 01–24, the import volumes of which in 2015–2016 were $25–26 billion. In 2017–2020, they ranged from $28.8 billion to $29.8 billion. In 2021, they amounted to a record $33.9 billion. Based on the formula (1), we can see that when calculating the index of physical volume of imports by base weights, the price in the numerator and denominator are the same, only the volumes are different. This proves that the volume affects the result of the calculations. Therefore, since the rate of customs duty becomes less to increase the volume of imports, if the rates for goods of groups 01–24 change to the lower side, the index of physical volume of imports will increase due to a clear increase in the volume of supplied products. The amount of food in a country plays an important role and is directly related to economic and food security. From January 1, 2019, to June 30, 2020, in which a reduction of import customs duties rates was applied to four codes of the CN FEA of the EAEU that classify squash—2007 99 500 3, 2007 99 500 4, 2007 99 500 5, and 2007 99 500 7, a positive dynamic of import of these goods was observed. In January 2019, imports of these goods were only $1259.21 thousand. By November 2020, the volumes had increased 3.8 times and reached $4743.97 thousand. In May 2020, the figure was $5565.34 thousand. Thus, a high degree of dependence of import volumes and, consequently, economic security indicators on the application of measures of customs and tariff regulation is illustrated. Another effective tool of customs and tariff regulation is the export duty. An example of a change in export duty rates could be a change in export rates for goods with a low degree of processing: oil, timber, gas, coal, and other resources. The effect of introducing a 10% rate in the second half of 2021 for goods 4407 11 930 0 and 4407 11 980 0 is presented in Fig. 1. By increasing the size of export rates, it was possible to contain the growing exports of the first half of 2021 in the second half of that year. The most exported products are fuel and energy products and mineral products from groups 25–27. However, export duty rates are set for timber and pulp and paper products, namely group 44, timber, particularly unprocessed and “roughly processed” timber (moisture content above 22%). The change in export rates is an incentive for domestic enterprises for deep timber processing and helps in decriminalizing the timber industry. Export duty rates for crude oil 2709 00, diesel fuel 2710 19 421 0–2710 19 480 0, 2710 20 110 0–2710 20 190 0, commercial gasoline 2710 12 411 0–2710 12 590 0, from 2710 20 900 0 and waste oil products 2710 91 000 0–2710 99 000 0 of the CN FEA of the EAEU, and the price level for Urals crude from February 2018 to date are shown in Fig. 2. Export duty rates for crude oil and used oil products are the same. The rates for marketable gasoline and diesel

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Fig. 1 Exports of goods 4407 11, USD, 2021. Source: Compiled by the authors based on (Federal Customs Service of the Russian Federation, n.d.)

fuel, light and middle distillates, benzene, and toluene are also the same. The highest rate for crude oil and diesel was registered in November 2018, while the volume of crude oil exports was 21820.6 thousand tons. The lowest rate for crude oil and diesel was in May 2020, as was the price of Urals oil. The highest rate for diesel fuel came in November 2018. The change in export duty rates mainly affects the change in federal revenues. Fewer volumes of oil were exported in 2020 than in 2018–2019. Export duty rates on energy resources were reduced in 2020, resulting in a lower percentage of customs payments on crude oil to the budget in 2020. Allocating funds from the budget can affect economic security indicators. For example, when allocating funds for the purchase of new equipment, there is an opportunity to reduce the degree of depreciation of fixed assets, increasing the index of physical volume of GDP, increasing the share of investment in fixed capital in GDP, increasing the index of industrial production and the index of economic activity “mining of minerals,” and so on.

4

Conclusion

The findings prove the possibility and sufficiently high effectiveness of the application of customs and tariff regulation in order to ensure and maintain economic security. Changes in the classification of goods under the CN FEA and changes in the rates of import and export customs duties can directly or indirectly affect many indicators of economic security. Given their interconnectedness and interdependence, adjustments through customs and tariff regulation may lead to the deterioration of some indicators at the expense of improvement of others. Scientists currently foresee the end of the era of globalization and friterism and the change of national economies to self-sufficiency with a significant increase in protectionism. In these circumstances, measures of customs and tariff regulation will become increasingly relevant, and their correct condition can positively affect overcoming the post-crisis phenomena and ensure the economic security of the country in the new conditions of the global economy.

Fig. 2 Dynamics of average Urals crude oil price and export duty rates for crude oil 2709 00 and diesel fuel from February 2018 to March 2022, USD per ton. Source: Compiled by the authors based on (Ministry of Energy of the Russian Federation, n.d.)

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References Andronova, I. V. (2015). Foreign economic security of The Russian Federation: New threats and their neutralization in the context of accelerated Eurasian integration (Synopsis of dissertation of Doctor of Economics). Russian Presidential Academy of National Economy and Public Administration. Accessed December 28, 2021, from http://www.rcit.su/article090.html Bogaturova, E. I. (2017). Customs tariff regulation of foreign trade activity as a tool for ensuring economic security. Rostov Scientific Journal, 12, 9–19. Federal Customs Service of the Russian Federation. (n.d.). Exports and imports of the Russian Federation by commodity. Accessed May 20, 2022, from https://customs.gov.ru/folder/502 Krivorotov, V. V., Kalina, A. V., & Belik, I. S. (2019). Threshold values of indicators for diagnostics of economic security in The Russian Federation at the present stage. Bulletin of Ural Federal University. Series Economics and Management, 18(6), 892–910. https://doi.org/ 10.15826/vestnik.2019.18.6.043

A. M. Sorokin et al. Ministry of Energy of the Russian Federation. (n.d.). Statistics. Accessed March 12, 2022, from https://minenergo.gov.ru/activity/ statistic Nosov, A. L. (2019). The choice of a balanced system and threshold values of indicators of economic security. Innovative Development of Economy, 2(50), 339–344. Pak, A. Y. (2020). Foreign trade security and its support system as a special element of economic security of the state. RUDN Journal of Economics, 28(3), 597–607. https://doi.org/10.22363/2313-23292020-28-3-597-607 Rebrina, T. G., & Silaeva, V. V. (2020). Customs and tariff regulation of foreign economic activity as an instrument of economic security of the country. Journal of Economy and Entrepreneurship, 14(7), 48–50. https://doi.org/10.34925/EIP.2020.120.7.006 Savkin, V. E. (2020). Indicators and threshold values of the economic security of the state. New in Economic Cybernetics, 2, 251–264. Severyanova, N. V. (2017). Customs and tariff regulation as a means of ensuring Russia’s economic security. Alley Science, 5(16), 270–273. Shcheka, A. A. (2019). Customs and tariff regulation as a factor of economic security. Krasnoyarsk Science, 8(5–2), 113–117.

Customs and Tariff Regulation of the Eurasian Economic Union in the Context of New Geo-economic Realities and Challenges to Industry Anna Yu. Pak , Alexander B. Malikhin and Margarita V. Shlenskaya

Abstract

Based on the study of the proposals received in 2020–2021 from the authorized bodies of the Eurasian Economic Union member states to change the rates of import duties on certain categories of goods received, the paper reveals the geographical, industry, and target features of customs and tariff measures of regulation of foreign trade activity of the EAEU. During the studied period, 90% of the measures were aimed at reducing or establishing zero rates of import duties. It was found that the most significant number of proposals accounted for goods of the engineering, metallurgical, and chemical industries. The authors investigated the impact of sanction restrictions on the application of measures of customs and tariff regulation in the context of the analysis of key measures that contribute to the improvement of macroeconomic stability of the EAEU member countries. Keywords

Eurasian Economic Union · Foreign trade regulation · Customs and tariff regulation · Sanctions

JEL Codes

F02 · F15 · F13 · F14

A. Y. Pak (✉) · D. A. Amatunyan · M. V. Shlenskaya Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected] A. B. Malikhin Lomonosov Moscow State University, Moscow, Russia e-mail: [email protected]

1

, David A. Amatunyan

,

Introduction

In today’s realities, it is particularly relevant to study the foreign trade interaction of the EAEU and the changes in measures of customs and tariff regulation caused by the geographical and commodity transformation of foreign trade. The functioning of the EAEU assumes that decisions in the field of customs and tariff regulation are taken not at the national level but at the level of the regional integration association. Simultaneously, the transformation of foreign trade relations of the Russian Federation entails the transformation of foreign trade relations of the entire EAEU and leads to a significant number of changes in the area of customs and tariff regulation. Thus, it is of particular interest to analyze the proposals considered by the Eurasian Economic Commission (EEC) on changing the level of import customs duty rates in the period from 2019 to 2021, classify them by geographical, industry, time, and other characteristics, and analyze the EEC decisions taken in 2022 on key measures that contribute to the macroeconomic stability of EEU member countries in the field of customs and tariff regulation.

2

Materials and Methods

Many studies are devoted to the basics of the application of customs and tariff regulations in foreign trade activities, which are part of various models of foreign trade (classical, neoclassical, and modern) (Krugman, 1990; Krugman et al., 2011; Linder, 1961; Porter, 1990; Posner, 1961; Ricardo, 2001; Smith, 1776; Stolper & Samuelson, 1941; Vernon, 1966). Contemporary works based on general and partial equilibrium models study the characteristics of supply and demand for imported and domestic goods, depending on the price of goods and its elasticity, as well as the exchange rate (Hong, 1999; Idrisov, 2010; Knobel, 2011; Leontief, 1956; Samuelson, 1948). P. Lindert examines the impact of the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_37

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tariff on the overall welfare of the nation, proposes the concept of “optimal tariff,” and notes that the introduction of customs and tariff protection reduces the overall welfare of the nation, but “one must know where the limit of the free trade regime lies” (Lindert, 1992). V. Novikov conducted a study on customs duty rates as a tool to directly influence the price of imported and domestic goods (Novikov et al., 2012). T. Saurenko has developed a model for assessing the impact of the rates of import customs tariff on the volume of imports in consumption within the EAEU member states and the set task of maximizing budget revenues (Saurenko, 2013). P. Hong points out that only two parameters, income and relative prices, directly affect the magnitude of demand for imports, while other factors, such as resource endowment, market size, consumer preferences, customs duties, etc., will be factored into changes in relative commodity prices (Hong, 1999). According to A. Knobel, the factors influencing demand include not only the income of the importing country and the prices of imported goods and domestic substitutes but the real effective exchange rate of the Russian ruble (Knobel, 2011; Knobel et al., 2019).

3

Results

3.1

Characteristics of Foreign Trade Activities of the EAEU

Foreign trade activities of the EAEU are currently the most important aspect of the development of the economies of the EAEU member states. Simultaneously, about 83% of the value of foreign trade in 2020 was accounted for by Russia ($519,293 million). In 2020, EAEU goods were exported to China, the Netherlands, the UK, Germany, Turkey, Italy, etc. Imports

were mostly from China, Germany, the USA, South Korea, Italy, and France. Analyzing the structure of exports and imports of goods in value terms, it should be noted that the main exports were mineral products (54.09% of the value of all exports), metals (10.49% of all exports), food products (8.16%), and chemical products (6.55%). The structure of imports was dominated by machinery, equipment, and vehicles (45.26% of the volume of imports in value terms), chemical products (18.22%), and foods (11.51%) (Table 1). The analysis of the commodity structure suggests a high share of imports of high-tech goods in the domestic markets of member states (machinery, equipment, and vehicles), textiles and footwear, as well as chemical products. Despite the decrease in the volume of foreign trade activity compared to 2019, the commodity and geographic structure has not undergone significant changes.

3.2

Analysis of Received Proposals to Change the Rates of Import Customs Duties

Due to changes in the global environment and the state of the domestic market and production of goods, the current measures of customs and tariff regulation are periodically revised by the EAEU countries. For this purpose, the state authorities of the EAEU countries, which are authorized to interact with the EEC, submit proposals concerning changes in the level of import customs duties, which are subsequently considered by the EAEU bodies (Eurasian Economic Union, 2014; Supreme Eurasian Economic Council, 2015). If the considered measures create favorable conditions for the development of domestic production in the EAEU countries, the corresponding changes will be introduced in the Common customs tariff of the EAEU and the FEACN of the EAEU.

Table 1 Trade volumes of the EAEU member states with third countries by aggregated commodity groups in 2020

FEACN* code of the EAEU 01–24 25–27 28–40 41–43 44–49 50–67 72–83 84–87, 90

Name TOTAL Food products and raw agricultural materials Mineral products Chemical products Rawhide Wood and paper products Textiles, textile products, and footwear Metals and derivative products Machinery, equipment, and vehicles

Export USD million 364,810.4 29,773.4

in % to 2019 79.2 119.0

197,327.0 23,880.3 114.0 12,636.1 1032.6

65.2 89.1 66.4 97.7 92.1

54.09 6.55 0.03 3.46 0.28

38,255.2 13,544.8

94.1 85.6

10.49 3.71

in % of total exports 100 8.16

Import USD million 259,817.1 29,897.2

in % to 2019 94.5 97.8

in % of total exports 100 11.51

3171.3 47,333.3 1069.2 3772.1 16,527.4

76.9 90.2 75.4 91.7 92.4

1.22 18.22 0.41 1.45 6.36

17,176.2 117,581.0

89.7 96.5

6.61 45.26

Note: * FEACN Foreign Economic Activity Commodity Nomenclature. Source: Compiled by the authors based on the Department of Statistics of the Eurasian Economic Commission (Eurasian Economic Commission, 2020, pp. 98–100)

Customs and Tariff Regulation of the Eurasian Economic Union in the Context of New. . . 16 14 12 10 8 6 4 2 0 Increase in the rate of import customs duty

Number of proposals

4

211

Extension o he Seng the rate period of validity Reducon o he Exempon from of the rate of of import rate of import import customs customs duty at import customs customs duty duty duty at the rate 0% of 0% 12

15

8

4

Fig. 1 Proposed changes in the field of customs and tariff regulation by the EAEU member states for the period from 2020 to 2021. Source: Compiled by the authors based on (Eurasian Economic Commission, n.d.)

From 2020 to 2021, 43 proposals were submitted to the EEC by the EAEU member states to change the rates of import customs duties (Eurasian Economic Commission, n. d.). Many proposals aim to establish import duty rates of 0% for certain goods, extending the period of their validity and reducing the rates—35 such proposals were made. In some cases, member states proposed to establish tariff concessions in the form of exemption from import customs duties. Thus, 90% of the total number of proposals aimed to reduce the rates. There were only four proposals from the EAEU member states to increase the level of import duty rates (Fig. 1). As for the sectoral distribution, the greatest number of proposals to reduce or establish import duty rates at the rate of 0%, as well as exemption from their payment, is noted in respect of goods of the chemical industry, metallurgy, and engineering industry. Eight proposals were made to reduce the rates of duties for the first two industries, and seven proposals were made for the engineering industry. Additionally, four proposals were made by the EAEU member states for agricultural and light industry goods; three proposals were made for the food industry; one proposal was made for the forestry and mining industries (Fig. 2). The increase in the size of import duty rates was considered in relation to goods of the machine-building industry and agricultural goods. The main stated objectives of the proposals of the EAEU member countries to reduce import duty rates are as follows: 1. Compensation of deficit of certain goods on the EAEU market, especially those the production of which is not available in the territory of the EAEU countries. 2. Support of domestic producers who use imported goods as raw materials or parts for their own production because lower rates reduce production costs and, consequently, increase the volume of products manufactured.

3. Ensuring favorable conditions in the market of imported goods in the EAEU countries and stabilizing their prices. Thus, almost all proposals of the EAEU countries concerning the measures of customs and tariff regulation during the reviewed period concerned the reduction of the level of rates for import duties. The main reasons for the decline are insufficient domestic production volumes and the uncompetitiveness of domestic goods.

3.3

Impact of Sanction Restrictions on the Application of Measures on Customs and Tariff Regulation

The foreign policy and the introduction of new sanctions against Russia in the spring of 2022 also make it possible to assess the dependence of the EAEU economy on imports. Restrictions on imports of goods from many countries lead to a further reduction of import duty rates to facilitate the import of goods, which affects the competitive environment emerging in the domestic market and the economic security of the EAEU in general. Food 1

3

Engineering industry

5

Metallurgy

4 7

1

Chemica lindustry Pulp and paper industry Light industry

8 8

Wood working industry Mining industry

Fig. 2 Sectoral distribution of proposals to change the size of the rate of import customs duty, pcs. Source: Compiled by the authors based on (Eurasian Economic Commission, n.d.)

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Most of the restrictions were imposed by the USA and the EU. These restrictions consist of a ban on imports into Russia of luxury goods and high-tech equipment. It is prohibited to import goods and technology for the aviation and space sectors of the economy, as well as technology and equipment for the energy sector. Sanctions also affected imports from Russia. A ban was imposed on imports of oil and gas from Russia to the USA and steel products to the EU. In addition to the sanctions imposed by the USA and the EU, imports to Russia are limited due to the suspension of many logistics companies. Under such conditions, the EEC makes decisions to establish zero duty rates and introduce benefits for many commodity items. Additionally, the possibility of organizing negotiation processes to conclude agreements on trade cooperation with such countries as China, Iran, Egypt, Israel, Indonesia, and Mongolia is being intensified and worked through. The EAEU bodies approved lists of goods imported into the EAEU from third countries for the implementation of measures to ensure macroeconomic stability of the EAEU countries. According to the decisions adopted, tariff concessions will be applied to the goods on the list until September 30, 2022 (Council of the Eurasian Economic Commission, 2022a, 2022b). Such products include food and products for its production, goods for the production of pharmaceutical, electronic, metallurgical, and light industry products, goods for digital technology, and goods used in construction and transport. Reduction of rates or provision of tariff benefits affected about 2300 sub-subheadings of the HS EEU (about 21 percent of the nomenclature), which may indicate insufficient domestic industrial production of such goods. These circumstances pose new challenges to the industry of the EAEU countries related to the urgent need for self-sufficiency in essential commodities.

4

Conclusion

For the entire period of operation of the EAEU in terms of taking decisions on changing the rates of duties (since 2015), no such wide range of decisions on zeroing the rates was taken as in April 2022. Additionally, 43 proposals were considered between 2020 and 2021, 90% of which were aimed at reducing import duty rates. These circumstances indicate a clear liberalization of customs and tariff regulation in the EAEU and the reduction of customs and tariff protection for a large list of goods of the most important industries.

References Council of the Eurasian Economic Commission. (2022a). Decision On amendments to the decision of the Council of the Eurasian Economic

Commission of December 20, 2017 No. 107 (March 17, 2022 No. 35). Moscow, Russia. Accessed February 15, 2022, from https://docs.eaeunion.org/docs/ru-ru/01431507/err_21032022_35 Council of the Eurasian Economic Commission. (2022b). Decision On amendments to some decisions of the Commission of the Customs Union and on approval of lists of goods imported into the customs territory of the Eurasian Economic Union in order to implement measures aimed at improving the sustainability of the economies of member states of the Eurasian Economic Union (March 17, 2022 No. 37). Moscow, Russia. Accessed February 15, 2022, from https:// docs.eaeunion.org/docs/en-us/01031483/err_18032022_37 Eurasian Economic Commission. (2020). Foreign trade in goods. EAEU statistics: Statistical digest, 2020. Department of Statistics of the Eurasian Economic Commission. Accessed February 15, 2022, from http://www.eurasiancommission.org/ru/act/integr_i_ makroec/dep_stat/tradestat/publications/Documents/Ext_2020.pdf Eurasian Economic Commission. (n.d.). Proposals of the Member States of the Customs Union and the Single Economic Space customs tariff regulation. Accessed April 9, 2022, from http://www. eurasiancommission.org/ru/act/trade/catr/ttr/Pages/announcements. aspx Eurasian Economic Union. (2014). Treaty on the Eurasian Economic Union (signed May 29, 2014, as amended May 8, 2015). Astana, Kazakhstan. Accessed September 10, 2021, from http://docs. eaeunion.org/docs/ru-ru/0043610/itia_05062014 Hong, P. (1999). Import elasticities revisited. DESA Discussion Paper No. 10. United Nations. Idrisov, G. I. (2010). Factors of demand for foreign capital goods in Russia. Economic Policy, 3, 115–137. Knobel, A. Y. (2011). Estimation of import demand function in Russia. Applied Econometrics, 4(24), 3–26. https://doi.org/10.2139/ssrn. 2169887 Knobel, A. Y., Aliev, T. M., Pyzhikov, N. S., & Flegotova, T. A. (2019). Trade and globalization: Developments in the last thirty years and future evolutionary trajectories. Delo. Krugman, P. (1990). Rethinking international trade. The MIT Press. Krugman, P., Obstfeld, M., & Melitz, M. (2011). International economics: Theory and policy. Pearson Education. Leontief, W. W. (1956). Factor proportions and the structure of American trade, further theoretical and empirical analysis. The Review of Economics and Statistics, 4, 386–407. Linder, S. P. (1961). An essay on trade and transformation. Wiley. Lindert, P. H. (1992). The economics of world economic relations. Progress-Univers. Novikov, V. E., Revin, V. N., & Tsvetinsky, M. P. (2012). Customs and tariff regulation of foreign economic activity and customs value. BINOM. Laboratory of Knowledge. Porter, M. E. (1990). The competitive advantage of nations. Macmillan Press. Posner, M. V. (1961). International trade and technical change. Oxford Economic Papers, 13(3), 323–341. Ricardo, D. (2001). On the principles of political economy and taxation. Batoche Books. (Original work published 1817) Accessed December 15, 2021, from https://socialsciences.mcmaster.ca/econ/ ugcm/3ll3/ricardo/Principles.pdf Samuelson, P. A. (1948). International trade and the equalisation of factor prices. The Economic Journal, 58(230), 163–184. https:// doi.org/10.2307/2225933 Saurenko, T. N. (2013). Development of the theoretical foundations of the customs policy of the Customs Union (Dissertation of doctor of economics). Russian Customs Academy. Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations. W. Strahan and T. Cadell. Accessed February 15, 2022, from https://data.bnf.fr/en/12099112/adam_smith_an_inquiry_into_ the_nature_and_causes_of_the_wealth_of_nations/

Customs and Tariff Regulation of the Eurasian Economic Union in the Context of New. . . Stolper, W., & Samuelson, P. A. (1941). Protection and real wages. Accessed January 17, 2022, from https://sites.duke.edu/econ206_ 01_s2011/files/2011/05/31a-Final-notes-Stolper-and-Samuelson.pdf Supreme Eurasian Economic Council. (2015). Decision “On the list of sensitive goods the decision to change the import customs duty rate for which is made by the Council of the Eurasian Economic

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Commission” (May 8, 2015 No. 16, as amended March 5, 2021). Moscow, Russia. Accessed February 15, 2022, from https://docs. eaeunion.org/docs/ru-ru/0117698/scd_12052015_16_doc.pdf Vernon, R. (1966). International investment and international trade in the product cycle. Quarterly Journal of Economics, 80(2), 190–207. https://doi.org/10.2307/1880689

On the Indicative Approach to Assessing International Trade within the EAEU Tatyana M. Vorotyntseva

Abstract

The paper analyzes statistical data characterizing the international trade of EAEU member countries, including a structured analysis by product groups and the share of EAEU member countries in mutual trade. It was found that the main volume of goods turnover accounts for the Russian Federation (61.95%), and the share of communication services is 81.22%. Moreover, the authors conducted a descriptive review of scientific sources that characterize international trade using indicators of sectororiented trade exchange, trade balance, movement of goods, and the level of border transparency. The considered indicators can be used as basic indicators to study and evaluate international trade relations and the main economic indicators of the EAEU countries, which emphasizes the importance of the correctness of their application and the need to reduce the error in the assessment of international trade. It is noted that EAEU member countries have different points of view on international trade, increasing exports and trade transparency. Despite some differences, the countries have significant preferences due to the region’s unification. Keywords

International trade · Export structure · Economic indicators · Scale of trade · Trade transparency

JEL Codes

F40 · O11 · O47 T. M. Vorotyntseva (✉) Peoples’ Friendship University of Russia named after Patrice Lumumba (RUDN University), Moscow, Russia Russian Customs Academy, Lyubertsy, Russia e-mail: [email protected]

1

Introduction

The international exchange of goods allows trading countries to accelerate the development of their economies by acquiring a part of imported, more competitive products and helps eliminate the need to produce all the goods and services consumed in the country. This emphasizes the need for a rational and reliable toolkit for assessing the region’s international trade.

2

Materials and Methods

The research used methods of analysis and synthesis in the evaluation of statistical data on international trade. Additionally, the descriptive method was used during the collection and analysis of scientific literature to identify the underlying approaches to assessing international trade, which includes selected indicators.

3

Results

Due to peculiarities in the scale of national territories, economic and resource potential, the volume and structure of trade turnover, industry, etc., the EAEU member countries face the same global problems (Vorotyntseva & Filatkina, 2022). Analyzing the international exchange of goods within the Eurasian Economic Union, the author concludes that the goods of groups 25–27, 28–38, and 72–83 of EAEU Commodity Nomenclature of Foreign Economic Activity (TN VED EAEU) predominate in the export turnover of EAEU countries with non-CIS countries. A significant part of imports to the EAEU are complex technical goods, vehicles, chemical products, and food and agricultural implements. Russia accounts for over 80% of such products. The volumes of mutual trade within the EAEU in 2020 are shown in Table 1.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_38

215

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T. M. Vorotyntseva

Table 1 Volumes of mutual trade of the EAEU in 2020, million rubles Code of economic activity A B C D E J M R

Name TOTAL Products of agriculture, forestry, and fisheries Mining products Products of manufacturing industries Selected energy resources Water supply; sewage system, waste disposal, and reclamation services Information and communication services Professional, scientific, and technical services Arts, entertainment, and recreation services

EAEU 55,053.94 1571.79

Including Republic of Armenia 709.90 171.50

Republic of Belarus 14,009.07 430.62

Republic of Kazakhstan 5671.88 254.10

Kyrgyz Republic 554.50 56.07

Russian Federation 34,108.60 659.49

9680.50 41,011.65 76.10 461.80

9.84 462.35 0.00 4.03

58.54 13,329.75 0.01 20.06

2036.98 3220.56 16.54 132.15

123.73 320.94 0.11 37.35

7451.41 23,678.05 59.45 268.22

85.47 0.20

0.18 0.00

14.19 0.02

1.48 0.00

0.20 0.00

69.42 0.19

1.61

0.00

0.12

0.00

0.00

1.49

Source: Compiled by the author based on Eurasian Economic Commission (EEC) (2022)

The structure by groups of goods and the share of EAEU member countries in mutual trade is presented in Table 2. The analysis shows that the Russian Federation accounts for 61.95% of goods turnover, while the share of information and communication services is 81.22%. The Republic of Belarus takes second place with a total share of exports of 25.45%, a share in the manufacturing of 32.5%, and products of agriculture, forestry, and fisheries—of 27.4%. The Republic of Kazakhstan ranks next in terms of the movement of goods. According to the Eurasian Economic Commission (EEC), the initial creation of the union between Russia, Kazakhstan, and Belarus was accompanied by a 32.1% increase in domestic trade in 2011 (to about $62 billion) and another 7.5% increase in 2012. The next phase saw declines of 5.5% in 2013, 11% in 2014, and 25.8% in 2015. By 2015, trade turnover between EAEU member countries dropped to $45 billion. This was followed by a sharp decline in trade turnover to $45 billion. A rebound was recorded till 2018. Then, the volume decreased compared to 2019 in 2020 (Fig. 1).

Foreign trade activities outside the EAEU have also seen a decrease for the region since 2012, declining by 34% in 2015, with similar trends thereafter. Assessing the impact of the EAEU on trade flows is debatable because its creation fell on inflation and the economic downturn in Russia and Kazakhstan. The decline in prices for petroleum products and raw materials led to a sharp distortion of indicators (in 2015, minerals accounted for 66% of EAEU exports and 33% of EAEU domestic trade). The final outcome was reflected in the foreign trade turnover of EAEU members with all major partners, domestically and internationally. Recently, the EAEU has primarily focused on creating an investor-attractive market in Russia for partners of different locations and commodity orientation (Smirnov, 2019a). As for investment within the EAEU, the figures are insufficiently high. In 2020, total exports were 89.3%, down from 2019. The most significant decrease in imports is observed for energy

Table 2 Composition by groups of goods and the share of EAEU member countries in mutual trade in 2020, %

Name TOTAL Products of agriculture, forestry, and fisheries Mining products Products of manufacturing industries Electricity, gas, steam, and air conditioning Water supply; sewage system, waste disposal, and reclamation services Information and communication services Professional, scientific, and technical services Arts, entertainment, and recreation services

EAEU 100 100 100 100 100 100

Including Republic of Armenia 1.29 10.91 0.10 1.13 – 0.87

Republic of Belarus 25.45 27.40 0.60 32.50 0.01 4.34

100 100 100

0.21 – 0.00

16.60 7.45 7.56

Source: Compiled by the author based on Eurasian Economic Commission (EEC) (2022)

Republic of Kazakhstan 10.30 16.17 21.04 7.85 21.73 28.62 1.74 0.01 0.05

Kyrgyz Republic 1.01 3.57 1.28 0.78 0.15 8.09

Russian Federation 61.95 41.96 76.97 57.73 78.11 58.08

0.23 1.10 –

81.22 91.44 92.39

On the Indicative Approach to Assessing International Trade within the EAEU Fig. 1 Dynamics of monthly volumes of EAEU mutual trade, USD. Source: Compiled by the author based on Eurasian Economic Commission (EEC) (2022)

217

700000000 600000000 500000000 400000000 300000000 200000000 100000000 0

2029

2019

goods—70.5%. The shares of the groups of exported goods are shown in Fig. 2. It is necessary to note that the COVID-19 pandemic and the worsening geopolitical situation have affected the indicaors of foreign trade for all geographic locations. International trade is known to be an important element of a country’s economic growth. Bhagwati (2005) and Helpman and Krugman (1895) pointed to other criteria for trade, namely its importance in reducing unemployment, increasing the level and efficiency of income redistribution, and providing economic growth. Solow (1957) also noted that market-oriented trade liberalization provides an opportunity to develop economic indicators. Intra-industry trade can be described by various pricing correlations, the object of which is the industry products moved across customs borders (according to Balassa) (Smirnov, 2019b). Based on Balassa’s studies, Grubel and Fig. 2 Shares of export commodity groups of EAEU member countries, %. Source: Compiled by the author based on Eurasian Economic Commission (EEC) (2022)

Lloyd (1975) substantiated a system governing the importance of quality in international trade. Intra-industry trade (IIT) should be calculated as the difference between trade revenue and the value received from the sale of goods or their purchase in each sector. Accordingly, the WOT index reflects the efficiency of the considered industry. The value of the index tends to be 100; therefore, the import or export of industry products increases. The equality of exports and imports indicates a high value of the index. It is statistically proven that intra-industry trade vertically prevails over horizontal one in bilateral trade (Salvatore, 2013; Tsypin & Vesnin, 2016). In the works of Wakasugi, we find an algorithm for the fragmentation of production through an index of multilevel trade of one industry. In his work, the author applied the gravity scheme to analyze multilateralism of trade (Wakasugi & Koyata, 1997). 28.4

Consumer goods, including

25.5 14.4

Non-food

13.2 14 12.3

Food

59

Intermediate goods, including

61.7 17.1

Energy

21.6 41.9

Other

40.1 0

10

20 2019

30 2020

40

50

60

70

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T. M. Vorotyntseva

The intra-industry trade indicator is presented below: Imti = 1 - 1 -

j exp i - impi j α - 100 exp i þ impi

ð1Þ

where: expi—imports of goods of the country i; impi—export of goods of the country i. Unbalanced economies remain significant worldwide, leading to financial dependence. In a study of OECD countries, Wakasugi proves that globalization causes a multifaceted movement between the values of cross-exchange rates and the equilibrium of trade exchange. First, globalization has led to vertical and horizontal changes in the structure of the flow of goods. This increased the interchangeability of goods moved across borders and shifted the emphasis on the interdependence of trade exchange equilibrium and cross-rates. Second, changes in supply logistics and deepening of the country’s trade specialization increased the stratification between the types of goods moved, which, in this case, reduced the interdependence of cross-courses and trade exchange equilibrium. Significant is the criterion of trade balance (Tbal), reflecting the difference between the price level of mutually moved goods, considering the real value of national currencies. Such a calculation is in demand in studies to measure specific sectoral economic indicators, such as competitiveness, trade deficit, or trade balance. The value of the criterion can be estimated from the following equation: Tbali = exp i - impi

One cannot but agree with Fujii, who links trade transparency to the ratio of total trade turnover to GDP; the transparency indicator is often used in cross-country studies (Fujii, 2017). The volume of trade in relation to GDP is influenced by various factors. They include trade orientation, the scale of markets, transport logistics, specialization of production, and consumption. Fujii notes that such a set of multiple factors, though convenient, makes it difficult to interpret its effects documented in different contexts. That is, the degree of trade transparency is also an indicator of economic transparency. Trade openness makes possible a greater transfer of technological ways, methods, means, and tools, as well as the pursuit of upward economic performance. The openness of trade is defined by dividing the sum of imports and exports by the GDP for a given period. The level of trade openness is calculated using the following equation: Toi =

expi—exports of goods of the country i; impi—imports of goods of the country i; GDP—the gross domestic product of the observed object for a certain period. A mathematical calculation gives an idea of the transparency of the economy and the increase in trade if the numerator tends to the denominator’s value. Indicators of the degree of openness of economies are determined by the following equation:

ð2Þ

Tоi =

expi—exports of goods of the country i; impi—imports of goods of the country i.

ð5Þ

exp—the export efficiency of the studied object; GDP—the gross domestic product of the studied object.

Export/Import (Ex/Im) is a split of the inter-movement of goods, expressed as a percentage. The Ex/Im indicator is calculated using the following equation:

where:

exp GDP

where:

expi—exports of goods of the country i; impi—import of goods of the country i.

exp i × 100 impi

ð4Þ

where:

where:

ExImi =

exp i - impi GDP

ð3Þ

This ratio clearly shows what affects the growth or decline of the economy: an increase or decrease in the volume of exports, respectively. The above indicators provide a theoretical basis for economic indicators for the EAEU member countries. The formation of the EAEU led to the emergence of such a global phenomenon as the implementation of the megaproject “Greater Eurasia” (Arsentieva, 2021). The Treaty on the Eurasian Economic Union, the EEU Customs Code, is a codified set of customs laws.

On the Indicative Approach to Assessing International Trade within the EAEU

If necessary, appropriate amendments are made to the Customs Code of the EAEU, which are aimed at the everchanging relationship between government agencies and business enterprises, strengthening business comfort and ensuring the safety and security of the logistics chain of international trade. Amendments to the Customs Code of the EAEU are caused by the need to modernize management mechanisms in the customs sector, providing for the elimination of social, economic, psychological, and moral barriers to international trade.

4

Conclusion

To summarize, the EAEU member countries have a significantly different road map of foreign trade activities, partnership, transparency, and other control points. This situation does not prevent effective mutual trade and trade with third countries, although there are subjective reasons for the decrease in trade turnover. The formation of the EAEU partnership solves the economic problems of all countries in the region, including access to new markets and the removal of trade and customs exemptions. Acknowledgments This paper has been supported by the RUDN University Strategic Academic Leadership Program.

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References Arsentieva, I. I. (2021). The greater Eurasian partnership beyond 2020: Problems and prospects for the project in the post-quarantine world. In V. I. Gerasimov (Ed.), Greater Eurasia: Development, security, cooperation (pp. 23–26). INION RAN. Bhagwati, J. (2005). In defense of globalization (Transl. from English; V. L. Inozemtsev Ed.). Ladomir. (Original work published 1934). Eurasian Economic Commission (EEC). (2022). Official website. Retrieved June 17, 2022, from https://eec.eaeunion.org/en/ Fujii, E. (2017). What does trade openness measure?. CESifo Working Paper No. 6656. Munich Society for the Promotion of Economic Research. Grubel, H. G., & Lloyd, P. J. (1975). Intra-industry trade: The theory and measurement of international trade in differentiated products. Wiley. Helpman, E., & Krugman, P. (1895). Market structure and foreign trade: Increasing returns, imperfect competition, and the international economy. MIT Press. Retrieved June 15, 2022, from https:// archive.org/details/marketstructuref00help Salvatore, D. (2013). International economics (11th ed.). Wiley. Smirnov, E. N. (2019a). Determinants of international trade growth under hyper-globalization and digitalization. Russian Foreign Economic Journal, 5, 26–40. Smirnov, E. N. (2019b). Digital transformation of the world economy: Trade, production, markets. Mir nauki. Solow, R. M. (1957). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. Tsypin, I. S., & Vesnin, V. R. (2016). World economy. INFRA-M. Vorotyntseva, T. M., & Filatkina, E. M. (2022). Integration as a mechanism for regulating international trade within the Eurasian economic union and the Asia-Pacific economic cooperation. Troitsky most. Wakasugi, R., & Koyata, F. (1997). R&D, firm size and innovation outputs: Are Japanese firms efficient in product development? Journal Production Innovation Management, 14, 383–392.

Russian-Azerbaijani Bilateral Trade Cooperation in Terms of Eurasian Integration Inna V. Andronova , Elshad Y. Mammadov , Arina A. Tinkova , and Kirill A. Andronov

Abstract

JEL Codes

The paper aims to determine the place and the role of bilateral trade flows of goods and services in foreign economic relations between Russia and Azerbaijan in the 2020s. The research objective is to analyze the dynamics and structure of bilateral trade in goods and services and identify trade obstacles and strategically important and promising trade cooperation areas in terms of Eurasian integration processes. The trade structure between Russia and Azerbaijan is beneficial: trade flows are diversified, there is no dependence on trade in primary goods, and the commodity structure contains important industrial goods. Trade dynamics are positive. Nevertheless, export potential exceeds real values. Despite the general historical development, absence of trade barriers, and cultural proximity, according to the authors, there are also pessimistic factors, including insufficient institutional efficiency and a low level of awareness of export opportunities among foreign trade enterprises. The promising trade cooperation areas include logistics projects that accompany the goods’ flows and boost trade in commercial services. Despite a considerable amount of literature devoted to post-Soviet trade relations, there is little attention to Russian-Azerbaijani cooperation. The paper contains a deep analysis of bilateral trade in HS6-digit goods and services structure, using trade concentration and trade potential indexes.

F10 · F15

Keywords

Bilateral trade relations · Russia · Azerbaijan · EAEU

I. V. Andronova · A. A. Tinkova (✉) · K. A. Andronov RUDN University, Moscow, Russia e-mail: [email protected]; [email protected]; [email protected] E. Y. Mammadov Azerbaijan State University of Economics, Baku, Azerbaijan

1

Introduction

International trade has been the subject of liberalization over the past 70 years. Trade liberalization can be bilateral and multilateral via World Trade Organization negotiations and international economic integration processes. Over the past 30 years, regional trade agreements (RTAs) have become the favored liberalization mechanism. From 2005 to 2020, the number of RTAs doubled and exceeded 300, covering more than 45% of all international trade value. The growth of engagement in international integration is largely due to the crisis in the WTO international trade negotiations system due to the large differentiation of trade interests. In this respect, economic integration is a more flexible mechanism because integrating countries often have more historical prerequisites and common economic interests. Russia and Azerbaijan are no exception due to their long and successful experience of joint economic development. In 2022, it will be 30 years since establishing diplomatic relations between Russia and Azerbaijan. Bilateral trade in goods between Russia and Azerbaijan has been steadily liberalized over the past 30 years in the context of the Commonwealth of Independent States (CIS). This research summarizes the results of bilateral trade cooperation. Studies prove that there are many prerequisites for developing bilateral trade relations in the context of international integration, and history plays a significant role in the formation and direction of bilateral trade (Eichengreen & Irwin, 1996). Depending on the historical background, each country chooses its own strategies and goals for the liberalization of trade relations. This statement is reflected in the proceedings of Butorina (2021) and Whalley (1998). Post-Soviet integration issues are considered in the articles of Andronova (2012, 2016), Savlov (2019), and Velieva and Mammadov (2020).

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_39

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I. V. Andronova et al.

Russian-Azerbaijani Trade Relations Background

Russia and Azerbaijan have a long history of relations and a common background: since 1804—as part of the Russian Empire, in 1920—the formation of the Azerbaijan Soviet Socialist Republic and a joint economy within the USSR. At these historical stages, the overall economic cooperation was highly beneficial for both participants: the process of industrialization began on Russia’s new frontiers as early as the nineteenth century. The territory of Azerbaijan, rich in natural resources, served to create the oil industry and copper smelting production. The development of the textile industry in Russia stimulated the emergence and specialization in cotton growing in Azerbaijan. The major railway tracks were built to connect Azerbaijan with the central regions of Russia. Thus, the industry share in Azerbaijan’s GDP by 1913 reached 70%. This was facilitated by a significant movement of technology and labor from Russia (more than 350 thousand migrants from 1886 to 1913). The industry, agriculture, education, and culture of Azerbaijan were actively enhanced during the Soviet period. New oil fields were discovered and mechanized; mechanical engineering, chemical, electrical, and metallurgical industries emerged. The Azerbaijani Soviet Republic was heavily involved in intra-Soviet trade. In 1988, the share of Soviet Republics accounted for 75% of Azerbaijan’s imports and 94% of its exports. The last and contemporary stage is the cooperation between Russia and Azerbaijan as two sovereign countries within the framework of the Commonwealth of Independent States Free Trade Area (Commonwealth of Independent States (CIS), 2011), the so-called post-communist neighborhood. Despite the strategic partnership and duty-free trade under bilateral preferential treatment, in our opinion, the dynamics and penetration of foreign trade relations do not reflect the available opportunities. In 2020, the place and role in the world economy of both countries differed significantly. Russia’s share in world merchandise exports is 1.86%, corresponding to 16th place in the world, while Azerbaijan ranks 80th (World Trade Organization (WTO), n.d.). Despite the rather high place of Russia in world markets, Azerbaijan is more open to international trade in relative indicators, such as the foreign trade quota, which equals 41% (and 24% for Russia).

2

Methodology

The basis for the analysis of bilateral trade relations is the dynamics and structure of bilateral exports and imports of goods and services. The authors partially use the

methodology of WTO Practical Guide to Trade Policy Analysis. The concentration of foreign trade flows by goods is estimated by Herfindahl–Hirschman Index. The methodology of the International Trade Center was used for the analysis of export potential. The methodology of the UN Institute of Comparative Regional Integration Studies was used to analyze the regional trade engagement via the intra-regional trade intensity index and symmetric trade introversion index (UN Institute of Comparative Regional Integration Studies, n.d.).

3

Results

3.1

Dynamics of Merchandise Trade Between Azerbaijan and Russia

The last 20 years showed a positive trend in trade dynamics between Russia and Azerbaijan. Azerbaijan’s import from Russia is twice higher than exports; they amounted to approximately $2 billion in 2021. Import dynamics show sustainable growth with insignificant fluctuations. Russia accounted for 18% of Azerbaijan’s imports in 2021. The absolute values of Azerbaijan’s exports to Russia have been consistently growing over the past six years after a significant drop in 2014–2016; in 2021, they reached approximately $1 billion (Fig. 1). Russia’s place in the geographical structure of Azerbaijan’s exports increased from eighth place in 2018 to third place in 2021, being behind Italy and Turkey. Russia’s share in Azerbaijan’s exports has been slowly growing over the past five years; in 2021, it reached 5%. The long-term dynamics show some drops in this indicator between 1997 and 2001, and then in 2008. Simultaneously, it is important to note that Azerbaijan’s export potential to Russia exceeds real exports. Russia shows the largest absolute difference between potential and actual exports in value terms, leaving room to realize additional exports worth $239 million (International Trade Center (ITC), n.d.-b). The authors believe that to achieve sustainable positive results in mutual trade between the two countries, it is necessary to qualitatively change the structures of the economies of both countries, increase investments, including joint ones, with an emphasis on innovative areas, deepen regional economic integration, and form common regional markets. In the case of Russian-Azerbaijani trade, the intra-regional trade intensity index is lower than might be expected from their role in international trade; it equaled 0.528 in 2020, with a positive trend since 2018. The symmetric trade introversion index is negative; in 2020, it equaled -0.309.

Russian-Azerbaijani Bilateral Trade Cooperation in Terms of Eurasian Integration 2.5

25%

2

20%

1.5

15%

$ bn

Fig. 1 Merchandise trade dynamics between Azerbaijan and Russia in 1996–2021, $ billion, %. Source: Developed by the authors based on UN Comtrade Database (n.d.)

223

Export to Russia, $ bn 1

0.92

10%

Merchandise Trade Structure Between Azerbaijan and Russia

Non-primary goods prevail in the structure of Azerbaijan’s merchandise imports from the Russian Federation. Top imports from Russia remain high in the structure of Azerbaijan’s total imports. Simultaneously, in 2021, 57 of HS6-digit imported goods depended on Russia by 100%, 208 of HS6-digit imported goods depended on Russia by more than 80%, and 371 of HS6-digit imported goods depended on Russia by more than 50%. The minimum value of the Herfindahl–Hirschman index shows that Azerbaijan’s import concentration from Russia by HS6-digit goods is low (Table 1). Thus, the diversification of merchandise imports is high. There is no clearly dominant group of goods, which positively characterizes the structure of the trade flow. Wheat, sunflower oil, chocolate, and medicines are among the largest and food security-aimed commodity items imported by Azerbaijan from Russia. The wide range of imported goods depends on approximately 90%–100% of Russian supplies. The top 20 HS6-digit products also include such significant industrial goods as railway coaches, vans and trucks, reception apparatus for television, and laundry products. Nevertheless, Russia does not sufficiently realize its export potential to Azerbaijan in several commodity items. The products with the greatest export potential from the Russian Federation to Azerbaijan include wheat (excluding durum) and meslin; sawn/chipped lengthwise, sliced, or peeled coniferous wood; ammonium dihydrogen orthophosphate. Passenger cars show the largest absolute difference between potential and actual exports in value terms, leaving $19 million worth of additional exports to be realized. (International Trade Center (ITC), n.d.-a). Agricultural products dominate the structure of Azerbaijan’s merchandise exports to Russia, which also

08 20 10 20 12 20 14 20 16 20 18 20 20

06

Russian share in exports,% Russian share in imports, %

20

20

20

20

20

19

04

0% 02

0 98 00

5%

96

0.5

19

3.2

Import from Russia, $ bn

play a crucial role in Azerbaijan’s total exports (Table 2). Russia is the only export destination for 140 HS6-digit commodity items. In 2021, the share of Russia in Azerbaijani exports of 246 HS6-digit goods was more than 80%, and for 331 HS6-digit goods—more than 50%. Vegetables and fruits are among the largest exported goods from Azerbaijan to Russia. The sectoral employment structure in Azerbaijan shows that 36% of the population is employed in agriculture. Therefore, the high external demand for these goods stimulates employment and creates positive well-being effects for the population of Azerbaijan. Fruits and vegetables are the products with the most significant export potential from Azerbaijan to Russian Federation. Tomatoes show the largest absolute difference between potential and actual exports in value terms, leaving room to realize additional exports worth $68 million (International Trade Center (ITC), n.d.-c). Additionally, the top 20 HS6-digit exported commodities include propylene (the most important component in the production of plastic containers, also widely used in construction) and bentonite (a mineral that has a wide industrial purpose). The Herfindahl–Hirschman index shows that the concentration of Azerbaijan’s exports to Russia by HS6-digit goods is low and equals 0.072, while the top 3 HS6-digit items account for 38.8%, which indicates a high diversification of the trade flow. In contrast, the commodity concentration of Azerbaijan’s exports to its largest trading partner—Italy—is very high: the top 3 HS6-digit items account for 98% of total exports, and the Herfindahl–Hirschman index is 0.541. The situation is similar in the case of Turkey, where the top 3 goods account for 78% of total Azerbaijan’s exports and the Herfindahl–Hirschman index is 0.379. This data indicates a low diversification of Azerbaijan-Turkey trade flow. Therefore, such a trade partnership certainly contributes to the economic growth of the exporting country, but the development might not be sustainable.

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Table 1 Top-20 HS6-digit commodities imported by Azerbaijan from Russia, 2021, $ million, %

Commodity description 100199 Cereals; wheat and meslin 440711 Wood; coniferous species, of pine 151211 Vegetable oils; sunflower seed or safflower oil and their fractions, crude 100119 Cereals; wheat and meslin, durum wheat 852872 Reception apparatus for television 870323 Vehicles 440712 Wood; coniferous species, of fir 271012 Petroleum oils and oils from bituminous minerals, not containing biodiesel, not crude 180690 Chocolate 441011 Particle board of wood 441233 Plywood; with sheets of wood only 845011 Washing machines; household or laundry-type 860310 Railway or tramway coaches, vans, and trucks 151790 Edible mixtures or preparations of animal or vegetable fats or oils 300490 Medicaments 730630 Iron or non-alloy steel; tubes and pipes 271019 Petroleum oils and oils from bituminous minerals, not containing biodiesel, not crude 210690 Food preparations 761290 Aluminum; casks, drums, cans, boxes 701090 Glass; carboys, bottles, flasks, jars, pots, phials, and other containers of glass 340220 Washing and cleaning preparations

Imports from Russia, $ million 257.4 73.9 55.8

Imports from all trade partners, $ million 270.4 78.7 55.8

Russian share, % 95% 94% 100%

Commodity’s place in Azerbaijan’s imports 3 14 28

Commodity’s place in imports from Russia 1 2 3

55.1

58.0

95%

24

4

51.2 47.8 45.3 36.1

71.2 345.6 46.7 117.5

72% 14% 97% 31%

18 1 42 8

5 6 7 8

35.0 32.4 30.8 30.0

56.7 57.5 32.3 44.1

62% 56% 95% 68%

27 25 70 46

9 10 11 12

28.3

28.3

100%

89

13

25.2

34.3

74%

66

14

22.4 20.3

333.9 24.9

7% 82%

2 95

15 16

18.7

129.4

14%

7

17

18.0 17.4 17.2

87.1 18.8 20.9

21% 92% 82%

12 128 112

18 19 20

17.1

63.1

27%

21

21

Source: Developed by the authors based on UN Comtrade Database (n.d.)

3.3

Bilateral Trade in Commercial Services

The international trade in services capacity between Azerbaijan and Russia is very high, partly owing to the fairly wide distribution of the Russian-speaking population in Azerbaijan. Figure 2 shows positive trade dynamics until 2019. The 2020’s decline in bilateral trade in services is mostly due to COVID-19. Simultaneously, Azerbaijan’s import of services from Russia is twice higher than exports. In 2020, the key types of exports of Russian services to Azerbaijan included business trips ($88 million), cargo transportation ($26 million), and business services ($29 million). These services accompany the merchandise flows. For example, “Agroexpress” is a project aimed at the transportation of fruits and vegetables, which is realized between the Russian Federation and Azerbaijan (JSC “RZD Logistics”, 2022), which might enhance the trade volume.

The main types of export of Azerbaijani services to Russia were business services ($29 million), of which the most important were advertising and marketing and personal trips ($12 million). It is important to note the strategic geographical location of Azerbaijan in terms of the EAEU—Iran partnership since the shortest land route from Russia to Iran passes through its territory. This convergence and cooperation play an important role in bolstering Azerbaijan’s logistics services.

4

Conclusion

The analysis of bilateral trade data between Russia and Azerbaijan leads to contradictory conclusions. The trade structure, in all respects, is beneficial. Trade flows are diversified. There is no dependence on trade in primary

Russian-Azerbaijani Bilateral Trade Cooperation in Terms of Eurasian Integration

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Table 2 Top 20 HS6-digit goods exported by Azerbaijan to Russia in 2021, $ million, %

Commodity description 070200 Vegetables; tomatoes, fresh or chilled 081070 Fruit; persimmons 390210 Propylene, other olefin polymers 390120 Ethylene polymers 080222 Nuts, edible; hazelnuts or filberts fresh or dried, shelled 390230 Propylene, other olefin polymers; propylene copolymers 070190 Vegetables; potatoes 080810 Fruit; apples 081090 Fruit; n.e.c. 080929 Fruit; cherries 080930 Fruit; peaches 271114 Petroleum gases and other gaseous hydrocarbons 271311 Petroleum coke; (not calcined), obtained from bituminous minerals 730429 Iron or steel; seamless, casing and tubing, of a kind used in drilling for oil or gas 310210 Fertilizers nitrogenous, urea 70700 Vegetables; cucumbers and gherkins, fresh or chilled 81010 Fruit; strawberries 250810 Clays, bentonite 630532 Sacks and bags 200989 Juice; of any single fruit or vegetable n.e. c.

Exports to Russia, $ mil 157.6 117.1 82.2 62.2 47.2

Exports to all trade partners, $ mil 160.2 125.9 120.0 79.6 108.8

Russian share, % 98% 93% 69% 78% 43%

Commodity’s place in Azerbaijan’s exports 6 7 8 13 10

Commodity’s place in exports to Russia 1 2 3 4 5

46.3

53.8

86%

18

6

38.5 36.1 34.4 31.0 29.0 21.6

40.1 37.4 37.2 31.1 29.2 21.6

96% 97% 93% 100% 99% 100%

21 24 25 29 30 35

7 8 9 10 11 12

16.5

25.4

65%

32

13

14.3

16.2

88%

40

14

8.9 8.7

118.5 8.8

8% 99%

9 52

15 16

8.7 8.4 8.0 8.0

8.8 9.7 16.5 13.4

98% 86% 48% 59%

51 49 39 41

17 18 19 20

Source: Developed by the authors based on UN Comtrade Database (n.d.)

goods (the dependency reduction is the point of agenda for both countries), and the commodity structure contains important industrial goods. In theory, the richest experience of joint governance and cultural proximity would indicate a high intensity of mutual trade. Despite these positive factors, the trade capacity has not been sufficiently realized. Simultaneously, there are no barriers to bilateral trade in goods. This leads us to the conclusion that the factors that impede trade growth and the deepening of bilateral economic relations may include some Fig. 2 Dynamics of Russia-Azerbaijan trade in commercial services, 2017–2020, $ million. Source: Developed by the authors based on the Bank of Russia (Central Bank of the Russian Federation [Bank of Russia], 2022)

obstacles. In our opinion, these obstacles include insufficient institutional efficiency of the institutions responsible for foreign economic policy of both countries, the lack of information and awareness about the directions and export opportunities of key foreign trade enterprises. In terms of Eurasian integration, business ties between Russia and Azerbaijan are intensifying. In particular, logistics projects stimulate mutual commodity flows, a new re-export through Azerbaijan opportunities for sanctioned products,

500.0

466.6

400.0 300.0 200.0

194.8

225.3

100.0

0.0 2017

2018

Export from Russia to Azerbaijan

2019

2020

Imports from Azerbaijan to Russia

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and the reorientation of Russian cargo traffic to the logistics infrastructure of Azerbaijan in terms of sanctions pressure. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project No. 060121-0-000.

References Andronova, I. (2012). Evolution of integration processes on post-soviet space. RUDN Journal of Economics, S5, 72–81. Accessed Accessed May 1, 2022, from https://journals.rudn.ru/economics/article/view/ 11945/0 Andronova, I. (2016). Eurasian Economic Union: Opportunities and barriers to regional and global leadership. International Organisations Research Journal, 11(2), 7–23. https://doi.org/10. 17323/1996-7845-2016-02-07 Butorina, O. (2021). Goals of regional integration: A modern understanding. World Economy and International Relations, 65(10), 5–14. https://doi.org/10.20542/0131-2227-2021-65-10-5-14 Central Bank of the Russian Federation [Bank of Russia]. (2022). External sector statistics. Accessed May 1, 2022, from https://cbr. ru/eng/statistics/macro_itm/svs/ Commonwealth of Independent States (CIS). (2011). Treaty on a free trade area between members of the CIS (October 8, 2011). St. Petersburg, Russia. Accessed May 1, 2022, from http://cis. minsk.by/reestrv2/doc/3183#text Eichengreen, B., & Irwin, A. (1996). The role of history in bilateral trade flows. In J. A. Frankel (Ed.), The regionalization of the world economy (pp. 33–62). National Bureau of Economic Research. Accessed May 1, 2022, from https://www.nber.org/system/files/ chapters/c7819/c7819.pdf International Trade Center (ITC). (n.d.-a). Export potential map: For Russian Federation to the Azerbaijan market. Accessed May 1, 2022, from https://exportpotential.intracen.org/en/products/gap-

I. V. Andronova et al. chart?toMarker=j&market=31&fromMarker=i&exporter=643& whatMarker=k International Trade Center (ITC). (n.d.-b). Export potential map: For Azerbaijan for all types of products. Accessed May 1, 2022, from https://exportpotential.intracen.org/en/markets/geo-map? fromMarker=i&exporter=31&toMarker=j&whatMarker=a& what=a International Trade Center (ITC). (n.d.-c). Export potential map: For Azerbaijan to the Russian Federation market. Accessed May 1, 2022, from https://exportpotential.intracen.org/en/products/gapchart?toMarker=j&market=643&fromMarker=i&exporter=31& whatMarker=k JSC “RZD Logistics”. “Agroexpress” – service of accelerated container trains to deliver Russian food products to China. Accessed May 1, 2022., from https://www.rzdlog.ru/services/clients/ agroexpress/ Savlov, M. E. (2019). Service sector (services) key features of Russia and Azerbaijan. RUDN Journal of Economics, 27(1), 18–34. https:// doi.org/10.22363/2313-2329-2019-27-1-18-34 UN Comtrade Database. (n.d.). Data. Accessed May 1, 2022, from https://comtrade.un.org/data/ UN Institute of Comparative Regional Integration Studies. (n.d.). Regional indicator. Accessed May 1, 2022, from https://riks.cris. unu.edu/regional-indicator Velieva, L., & Mammadov, E. (2020). Azerbaijan and the Eurasian Economic Union: Prospects and constraints. International Cooperation of Eurasian States: Politics, Economics, Law, 2, 80–84. Accessed May 1, 2022, from https://cyberleninka.ru/article/n/ azerbaydzhan-v-eaes-byt-ili-ne-byt Whalley, J. (1998). Why do countries seek regional trade agreements? In J. A. Frankel (Ed.), The regionalization of the world economy (pp. 63–90). National Bureau of Economic Research. Accessed May 1, 2022, from https://www.nber.org/system/files/chapters/ c7820/c7820.pdf World Trade Organization (WTO). (n.d.). Trade profiles. Accessed May 1, 2022, from https://www.wto.org/english/res_e/statis_e/trade_ profiles_list_e.htm

A Feasibility Study of China-EAEU Free Trade Agreement Natalia V. Yurova

and Jiahui Yao

Abstract

JEL Codes

Rising protectionism, trade disputes between large countries, and the COVID-19 pandemic have posed a new set of challenges that confront all economies worldwide. Cooperation is the only way to overcome these challenges, while free trade agreements (FTAs) are an effective method to strengthen cooperation. Signing a FTA between China and the Eurasian Economic Union (EAEU) is a viable approach to enhancing coordination between China’s Silk Road Economic Belt (SREB) lnitiative and the EAEU, as well as fostering the development of China-EAEU economic cooperation. The paper aims to highlight approaches for signing the CEAFTA based on the analysis of its foundation and obstacles. The authors essentially follow qualitative and quantitative methodologies for determining the conditions for establishing the CEAFTA and using related data (numerical and non-numerical). To formulate the CEAFTA, in the authors’ opinion, China and the EAEU could take steps in several directions. First, the countries could build effective institutions to coordinate multilateral economic reactions, which could help link up their development strategies and coordinate related policies. Second, the countries can continue enhancing and deepening cooperation in various fields; in particular, considering the digital economy as a key engine of growth and economic recovery in a postCOVID world. Third, the countries can enhance mutual understanding and trust and form a common concept of building the CEAFTA.

F13 · F15 · F50 · F53 · P45

1

Introduction

Keywords

EAEU covers the continental landmass of Eurasia, geographically located between China and Europe (Eurasian Economic Commission, n.d.-a). Since the establishment of the EAEU, an important aspect of its development is considered to be the docking with China’s SREB lnitiative. On May 17, 2018, China and the EAEU member states officially signed the Agreement on Trade and Economic Cooperation. This implied that the first important institutional arrangement reached in terms of the economy marked a new phase in China- EAEU trade and economic cooperation, laying the foundation for the CEAFTA. Considering that the CEAFTA meets the needs of all parties involved (including national economic security and social stability) and helps alleviate the geopolitical risks of the Eurasian continent, its study has important theoretical and practical significance. Since 2015, the study of the CEAFTA has gained traction in academic cicles, particularly in Chinese academia (Wang & Zhang, 2019). However, existing Chinese studies are cobbled together without substantive analysis and conclusions. The studies of academia of the EAEU members have seldom mentioned the CEAFTA. Therefore, this paper tries to conduct a comprehensive and in-depth analysis, study the foundation of the CEAFTA and its obstacles, and identify the approaches for its formulation.

China-EAEU FTA (CEAFTA) · Economic cooperation · Free trade agreements (FTAs) · Silk Road Economic Belt (SREB) Initiative · COVID-19 pandemic

2

N. V. Yurova (✉) · J. Yao Belarusian State University, Minsk, Belarus e-mail: [email protected]

Method

The research essentially follows qualitative and quantitative methodologies. Data (numerical and non-numerical), which is relevant to the research, is mainly collected from secondary

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_40

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sources, including documents. In the article, the authors carried out a structural and functional analysis of ChinaEAEU international trade in recent years based on official statistics. Logical reasoning was used to make inferences in the study.

3

Results

3.1

The Rise of FTAs

Since the late 1990s, countries worldwide have increasingly emphasized FTAs as a trade policy tool to strengthen, share, and accelerate sustainable development among countries and across regions (Kawai & Wignaraja, 2010, p. 3). As of March 19, 2022, there have been 316 FTAs notified to WTO, which accounted for 55% of 577 Regional Trade Agreements (RTAs) notified (354 RTAs are in force). The benefits of FTAs include the conclusion speed of FTAs negotiation, the flexibility of FTAs, and fewer loss of autonomy over other types of RTAs. The three regions that have merged at the forefront in promoting FTA activity are Europe (with 158 RTAs in force), the Americas, including South, North, and Central America (with 164 RTAs in force), and the Asia-Pacific region (with 101 RTAs in force) (World Trade Organization, n.d.). It has seen a dramatic increase in the number of such agreements. Currently, China and the EAEU already have certain conditions for establishing FTA. However, there are still some obstacles.

3.2

A Foundation for Establishing the CEAFTA

On the one hand, China is facing growing pressures on the supply of certain commodities, which makes its economy difficult to maintain stable growth. However, the EAEU member states, particularly Russia and Kazakhstan, are reliable suppliers to meet these needs of China. Thus, China’s growing interest in certain commodities is adding to the diversity of exports and investment sources available for relevant member states to develop capital-intensive energy and natural resources projects. On the other hand, the EAEU member states have great demand in global markets for

machinery and equipment, electronic products, household appliances, light industrial products, etc. China has made significant advancements in these industries, and its wide variety of industrial products meets the EAEU member states’ demands. Therefore, the strong complementarity with each other, which is identified by differences in endowment resources, industrial structure, and consumption level, is a significant favorable factor for strengthening mutually beneficial cooperation and establishing CEAFTA. Nowadays, faced with a complicated and severe environment, economic relations between China, the EAEU, and its members have maintained substantial development. China is now the EAEU’s largest trading partner. As shown in Table 1, from 2015 to 2019, the annual trade value between China and the EAEU maintained a growth rate of 13.85%. In 2020 it amounted to $125.98 billion: China’s share reached 20.17%. In 2021, with the global trade’s recovery from the COVID-19 crisis, China-EAEU merchandise trade increased and equaled $166.54 billion (Eurasian Economic Commission, n.d.-b). Investment cooperation is another important aspect of the development of China-EAEU economic relations. China has become the main investor in the EAEU member states in recent years. Stock FDI from China to the EAEU member states reached about $ 23.5 billion (up nearly 593% from 2008) (Ministry of Commerce of the People’s Republic of China, 2020). Within the EAEU territory, the China-Belarus Industrial Park “Great Stone” with tax benefits and another special regime, as China’s currently largest overseas economic cooperation zone, is an important platform for cooperation between China and the EAEU. By the end of 2021, 85 resident companies from 15 countries, including China, Belarus, Russia, Ukraine, the EU countries, Switzerland, Israel, Singapore, and the USA, registered in the Park (Belta, 2022). Additionally, financial cooperation between China and the EAEU at bilateral and multilateral levels has yielded fruitful results. The bilateral currency swap agreements, which have been signed by the People’s Bank of China with the central banks of four EAEU member states, allow each country’s central bank to access the other’s currency without trading via the USD. China and the EAEU member states have actively pursued trade agreements at bilateral and regional levels, concluding FTAs in various regions worldwide. Since 1978, China has

Table 1 China-EAEU merchandise trade ($ billion) Year Total trade China’s exports to the EAEU China’s imports from the EAEU Trade balance

2015 78.85 43.81 35.06 8.73

2016 78.56 45.68 32.88 12.8

Source: authors based on EEC (Eurasian Economic Commission, n.d.-b)

2017 102.74 57.45 45.29 12.16

2018 126.3 63.34 62.96 0.38

2019 132.46 66.91 65.55 1.36

2020 125.98 66.33 59.65 6.68

2021 166.54 87.31 79.23 8.08

A Feasibility Study of China-EAEU Free Trade Agreement

made a consistent effort to integrate into the global economy. In particular, since the accession of China to WTO in December 2001, it has paid special attention to FTAs (Central Committee of the Communist Party of China, 2016; Centro Studi sulla Cina Contemporanea, 2011; Ministry of Foreign Affairs of the People’s Republic of China, 2012). The Regional Comprehensive Economic Partnership, which was launched on November 20, 2012, and signed by China and 14 other Asia-Pacific countries on November 15, 2020, came into force in January 2022. It would give a tremendous boost to the post-COVID economic recovery efforts. Meanwhile, on September 16, 2021, China officially submitted its application to join the Comprehensive and Progressive TransPacific Partnership for further expansion of opening-up, building a new development model of “dual cycles”. The EAEU member states are currently negotiating FTAs with India, Israel, and Egypt. In September 2020, the EAEU initiated joint studies on the prospects for the conclusion of FTAs with Mongolia and Indonesia. In particular, China and all EAEU member states have established strategic relationships and cooperation mechanisms since establishing diplomatic relations. Additionally, China and all EAEU member states are involved in the work of the Shanghai Cooperation Organization (SCO)—China, Russia, and Kazakhstan are the core member countries of the SCO, Belarus is an observer state, and Armenia is a dialogue partner. These can help form a foundation for further strengthening, promoting, and developing their comprehensive economic cooperation. Furthermore, increased pressure from the West and the threat of the COVID-19 pandemic make China and the EAEU member states become closer and provide certain conditions for negotiations on FTAs. In fact, the FTA conclusion can expand the scope of cooperation among related countries and enable them to improve their global standing, thereby promoting political security and social stability.

3.3

Factors Impeding the CEAFTA

On the one hand, the EAEU’s share in China’s trade (2.71%) remains relatively small, and the trade balance has been roughly in deficit for the past few years. This will lead to growing suspicion of China’s exploitation and worries about over-dependence on China’s economy. Furthermore, China’s FDI in the EAEU remains relatively insignificant. On the other hand, there is a significant asymmetry in trade and investment cooperation between China and the member states of the EAEU (Ministry of Commerce of the People’s Republic of China, 2020). Regarding the structure of merchandise trade between China and the EAEU, the top export categories of the

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EAEU to China are mineral raw materials, primarily fuel and energy, etc., while the main categories of the EAEU’s imported products from China are machinery, electronic equipment, household items, etc. Meanwhile, China’s stock of FDI in the EAEU was also relatively concentrated in these sectors. That is, China-EAEU trade and investment cooperation is based primarily on low-value-added primary products and raw materials, which are easily affected by international markets. This will make it difficult to deepen China-EAEU economic cooperation and make substantive progress in negotiations on the conclusion of FTAs. Additionally, there are also asymmetric shocks within the EAEU because of big economic differences among member countries. In terms of the size of their economy, Russia’s GDP is about 117 times larger than that of Armenia, and its is about six times larger than the combined GDP of the other four members. That is, Russia has overwhelming dominance in all aspects of the EAEU. As a result, other member states are concerned that Russia, which is the most powerful and dominant member, may receive the most benefits and create pressure on or pose threats to others (Mostafa & Mahmood, 2018). Meanwhile, given the EAEU’s large commodity exports and increasing imports of manufactured goods, which is largely attributed to the gradual dismantlement of the old value chains of the former Soviet Union and the existence of “Dutch disease” syndrome in the sectoral structure of member economies. In particular, in 1996, Russia was one of the biggest suppliers of manufactured goods to China, but, in 2017, it became the supplier of commodities to China and the importer of Chinese manufactured goods (Melchior, 2019, p. 364). Therefore, such asymmetric shock within the EAEU and the member countries’ irrational sectoral structure hinders the in-depth development of Eurasian integration, sustainable development of member states (Hillman, 2020). Under the CEAFTA, tariff reductions may produce different economic effects on China and the EAEU member states. Tariff reduction would increase trade flows between China and the EAEU member countries. It may also further expand China’s trade surplus, and the EAEU would benefit to a very limited extent. Research using the Global Trade Analysis Project shows that with the further opening up of China’s market, the overall welfare of the EAEU would decline. According to experts, mutual benefits may appear only when China reduces tariffs actively, and the EAEU reduces tariffs relatively conservatively (Yurova & Yao, 2021). Simultaneously, despite the extremely volatile geopolitical situation and the threat of the COVID-19 pandemic faced by China and the EAEU countries, it makes more possibilities for promoting the FTA conclusion. It also makes the conclusion of the CEAFTA full of uncertainties.

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N. V. Yurova and J. Yao

Approaches for the CEAFTA

Considering the above factors, an expeditious launch of CEAFTA negotiations is unlikely. However, to further advance the process of negotiating FTA, China and the EAEU member states could take steps in the following directions. Within the SCO framework, the countries can build effective institutions to coordinate multilateral economic reactions. This would help to link up the development strategies of China and the EAEU member states and coordinate their policies. China and the EAEU member states could continue to enhance and deepen cooperation in various fields. They can regularly organize exhibitions and business forums at all levels to enhance mutual understanding, improve brand awareness, create business cooperation opportunities. But they can increase the share of local currency in trade, investment, and credit, and promote the opening of financial markets, especially because the financial sectors in Russia and Belarus are facing Western economic sanctions. Based on this, they could create more opportunities for collaboration in areas such as digital infrastructure, 5G, artificial intelligence, and big data (Yurova & Yao, 2019). China and the EAEU member states could enhance mutual understanding and trust and form a common concept of building the CEAFTA. In fact, this is essential for successfully establishing the CEAFTA. First, it is necessary to make it clear that the CEAFTA concerns not only cooperation in trade and investment but also strategic cooperation involving national rejuvenation and security. It could be said that this is an important way to break the “containment of Western countries.” Second, it could fully use the meetings of leaders of relevant countries and governments, various conferences, and academic forums to discuss the necessity and feasibility of the conclusion of the CEAFTA. Third, cultural exchanges between countries should be strengthened to reduce or avoid the emergence of “the threat of China.” Then, education and training platforms could be established to overcome language and cultural obstacles in economic cooperation. In particular, China should require all overseas companies and institutions to strengthen personnel training and management, fully understand and comply with local rules and regulations and customs, and pay attention to their behavior and speech. Additionally, the EAEU could continue advancing economic structural reform to eliminate or reduce drawbacks due to the former Soviet Union’s pattern and the “Dutch disease” effect. Based on greater consideration of the EAEU’s interests, China could first combine its own supply-side structural reforms with the internal structural reforms of the EAEU to develop cross-regional industrial cooperation with the EAEU, thus providing important opportunities for the EAEU member states to optimize and adjust their industrial structure, especially in the manufacturing industry. Second,

China could simultaneously negotiate the FTA and investment agreements with the EAEU, increasing its investment in the EAEU member states, especially for their weak sectors. Third, China could give appropriate concessions to the EAEU member states and allow their weak sectors to implement a longer period of tax reduction under the premise of ensuring China’s own interests.

4

Conclusion

FTA between China and the EAEU would be in accord with the development strategies of such countries and an important direction to deepen their economic and trade cooperation. Building a mutually beneficial and win-win cooperation mechanism and replacing suspicion of relevant countries with trust are the keys to the launch of the CEAFTA negotiations. The main conclusion of the study is that the China-EAEU economic integration format of international trade has significant development prospects. Unleashing these promises will accelerate economic and social development and enhance the resilience of the China-EAEU integrated economic systems in the Decade of Action and beyond.

References Belta. (2022, January 21). Benefits of Great Stone industrial park for Belarus, China explained. Accessed March 19, 2022, from https:// eng.belta.by/economics/view/benefits-of-great-stone-industrialpark-for-belarus-china-explained-147122-2022/ Central Committee of the Communist Party of China. (2016). The 13th five-year plan for economic and social development of the People’s Republic of China. Beijing, China. Accessed November 11, 2021, from https://www.greengrowthknowledge.org/sites/default/files/ downloads/policy-database//CHINA%29%20The%2013th% 20Five-Year%20Plan%20%282016-2020%29.pdf Centro Studi sulla Cina Contemporanea. (2011). Full text of Hu Jintao’s report at 17th Party Congress. Accessed November 11, 2021, from http://www.cscc.it/upload/doc/full_text_of_hu_jintaos_report_at_ 17th_party_congress___qiushi_journal.pdf Eurasian Economic Commission. (n.d.-a). Social and economic statistics. Accessed November 7, 2021, from http://www. eurasiancommission.org/en/act/integr_i_makroec/dep_stat/econstat/ Pages/default.aspx/ Eurasian Economic Commission. (n.d.-b). Trade with the third countries. Accessed March 19, 2022, from http://www. eurasiancommission.org/ru/act/integr_i_makroec/dep_stat/tradestat/ tables/extra/Pages/default.aspx/ Hillman, J. E. (2020). China and Russia: Economic Unequals. Center for Strategic and International Studies. Accessed December 1, 2021, from https://csis-website-prod.s3.amazonaws.com/s3fs-public/publi cation/200715_ChinaandRussia.pdf Kawai, M., & Wignaraja, G. (2010). Asian FTAs: Trends, prospects, and challenges. ADB Economics Working Paper Series No. 226. Manila, Philippines. Accessed November 7, 2021, from https:// www.adb.org/sites/default/files/publication/28273/economicswp226.pdf

A Feasibility Study of China-EAEU Free Trade Agreement Melchior, A. (2019). Russia in world trade: Between globalism and regionalism. Russian Journal of Economics, 5(4), 354–384. https:// doi.org/10.32609/j.ruje.5.49345 Ministry of Commerce of the People’s Republic of China. (2020). China’s outward foreign direct investment: Statistical bulletin 2020. Accessed November 11, 2021, from http://images.mofcom. gov.cn/hzs/202111/20211103154114436.pdf Ministry of Foreign Affairs of the People’s Republic of China. (2012). Full text of Hu Jintao’s report at 18th Party Congress. Accessed November 11, 2021, from https://www.mfa.gov.cn/ce/ceus//eng/zt/ 18th_CPC_National_Congress_Eng/t992917.htm Mostafa, G., & Mahmood, M. (2018). Eurasian Economic Union: Evolution, challenges and possible future directions. Journal of

231 Eurasian Studies, 9(2), 163–172. https://doi.org/10.1016/j.euras. 2018.05.001 Wang, S., & Zhang, N. (2019). Analysis of the prospects of establishing China and EAEU FTA. Eurasian Economy, 6, 23–45. World Trade Organization. (n.d.). Regional trade agreements. Accessed March 19, 2022, from https://rtais.wto.org/UI/ PublicMaintainRTAHome.aspx Yurova, N. V., & Yao, J. (2019). Prospects of China-EAEU cooperation on the digital economy. Digital Transformation, 3(8), 5–16. Yurova, N. V., & Yao, J. (2021). China and the EAEU countries: Strategies and new opportunities for trade and investment cooperation. National Institute for Higher Education.

Dollarization in Ecuador, Economic Growth, Trade Balance, Impact on Ecuadorian Foreign Trade Segundo Elías Yancha Tuasa

Abstract

Keywords

The paper analyzes the adoption of the dollarization in Ecuador, a process through which the Sucre was replaced as the official currency, giving way for the dollar to fulfill the three main functions such as: a unit of account, a reserve of value, and means of payment. This was a result of a deep crisis that the country experienced due to misalignments in its fiscal and monetary policy, its ungovernability, and the lack of confidence of its population in the national currency. Beyond being a technical norm to face the economic instability experienced by the country, dollarization was given as a reaction to the crisis. Therefore, the conditions were not structured to give way to firm dollarization, and it was necessary to wait a few years to observe changes in the Ecuadorian economy. To observe the evolution of the Ecuadorian economy and the behavior of its international economic relations since the dollarization, the present work analyzes the macroeconomic variables—GDP and trade balance, for which a descriptive analysis is carried out based on statistical information obtained from the Central Bank of Ecuador, World Bank statistics, and information of the ECLAC. The author studies the macroeconomic variable (GDP and trade balance) using such tools as statistics that allows calculating the variations of the variables considered in the analysis and leads to several conclusions. Dollarization generates cyclical growth periods in Ecuador and high volatility in GDP variation rates. As for the trade balance, the analyzed results show that the country’s international economic relations require encouraging national exports with the intention of achieving a favorable balance of the trade balance for the country.

Dollarization · Gross Domestic Product · Economic crisis · Export · Import · Trade balance · Economic growth · International economic relations

S. E. Y. Tuasa (✉) Peoples’ Friendship University of Russia named after Patrice Lumumba, Moscow, Russia

JEL Codes

F1 · F10 · F14 · F50

1

Introduction

Following the economic and financial crisis experienced by Ecuador in 2000, which led to the dollarization of the Ecuadorian economy, the dollar replaced the local currency (Sucre) as a reserve of value, a unit of account, and means of payment and exchange. The dollarization of the Ecuadorian economy brought with it profound changes that conditioned its development. The conditions were not structured to give way to firm dollarization, and it was necessary to wait a few years to observe changes in the country’s economy. To analyze the repercussions on the evolution of the Ecuadorian economy, this paper uses statistical series to analyze the macroeconomics variables: Gross Domestic Product (GDP) and the trade balance. With a dollarized economy, the strengthening of trade relations with the outside world is of fundamental importance. In addition to the commercial exchange between imports and exports, the strengthening of trade relations constitutes one of the mechanisms for generating foreign exchange earnings, making it possible to develop productive activity, increase the economy’s liquidity, and, therefore, maintain the dollarized scheme available in the country. Under this consideration, the present work analyzes the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_41

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behavior of the trade balance and GDP as the variables that allow observing changes in the Ecuadorian economy.

2

Methodology

The characteristics evolution of the dollarization process in the Ecuadorian economy were analyzed in the works of Edwards (2001), Lucero (2016), Mero (2016), Michelena (2014), Onur et al.(2014), Sierra and Lozano (2010), Toscanini et al. (2020), Valdivieso Mora et al. (2016), and Zambrano (2018). The macroeconomic variables are analyzed by the Central Bank of Ecuador (2020a, 2020b, n.d.), Economic Commission for Latin America (ECLAC) (n.d.), and World Bank (2020). For this analysis, the inductive method was used, complemented by the deductive method that allows resorting to theories, analysis, and general principles that help explain the incidence of dollarization in Ecuador’s international economic relations. For this, it was resorted to identifying some of the macroeconomic variables that explain the variation of the Ecuadorian economy. Thus, GDP and the trade balance are analyzed as the variables that indicate the behavior of Ecuador’s international economic relations with different international economies. To do this, using such tools as mathematics and statistics, the author checks the behavior of the trade balance and GDP as the variables that show the commercial relationship with the different international economies and the evolution of the Ecuadorian economy, respectively. For this, the author used the analysis of a series of statistics and information obtained from the Central Bank of Ecuador, World Bank statistics, and the ECLAC.

3

Results

The development of international economic relations has changed dramatically, either by trade agreements that come from individual countries or by means of blocks and regional integration in the context of the consolidation of what is known as the process of globalization. Dollarization is considered as a process of monetary override or substitution, where an economy replaces its own currency with the US dollar, leaving out of circulation the national money to fulfill the three main functions: a unit of account, a reserve of value, and means of payment. The phenomenon experienced by Ecuador when it adopted the dollarization of its economy on January 9, 2000, brought with it profound changes in its development, growth, and international economic relations.

The dollarization, adopted as a measure to combat unsustainable inflation, arose from misalignments in fiscal and monetary policy. In fiscal terms, the excessive deficit caused inflation. This high inflation triggered the exchange rate to unsuspected levels. In the monetary terms, trying to stabilize the exchange rate, the Central Bank of Ecuador (BCE) increased interest rates, thinking that this measure would make the public demand more national currency and less foreign currency, which had not happened in practice because there was little confidence in the country (both, in the government and, therefore, in the currency). Thus, the people searched for the dollar as the currency of refuge. A decisive element in adopting the dollar as the currency of exchange, store of value, and unit of account in Ecuador was the loss of public confidence in the local currency. In practice, the dollar replaced the Sucre as the currency of interchange because transactions in durable consumer goods (vehicles) and investments (residences and real estate rentals) were already agreed in dollars, even before its adoption. Below are the changes in GDP, which make it possible to establish how the Ecuadorian economy has changed in terms of its economic growth. The changes in the balance of trade are also detailed, showing the behavior of the Ecuadorian economy in terms of its international economic relations. Based on the fact that the dollar is sustainable when it responds to a decalogue of requirements (Edwards, 2001) that demands mobility of factors, high level of trade in goods, diversification of production, price, and the flexibility of wages, among others (Sierra & Lozano, 2010), the analysis of the statistical information obtained from the Central Bank of Ecuador allows the author to assess the growth of Ecuador in these two decades of dollarization. After overcoming the crisis of 2000, economic growth has had ups and downs that show an economy that is still far from sustained growth. We can see this in the following graph (Fig. 1). According to information from the Central Bank of Ecuador (ECB), the Ecuadorian economy grew cyclically; the GDP that reached $18,319 million in 2000 went to a GDP of $102,561 million in 2021. According to the ECLAC, by 2022, the Ecuadorian economy will grow by 2.6%, evolving the per capita income from $1300 in 2000 to more than $5665 in 2022. However, this growth is still below the world average, which represented $12,360 in 2021. According to forecasts, it is estimated that the per capita income will reach $6133 in 2022. The evolution of the Ecuadorian economy reached its lowest growth rate of -7.8% in 2020 (Fig. 1), 3.1% higher than that in 1999 prior to the dollarization, which was 4.7%. When comparing 2020 and 2019, the year in which the COVID-19 lockdown began, the Ecuadorian economy experienced an unprecedented contraction of 0%, which is

Dollarization in Ecuador, Economic Growth, Trade Balance, Impact on Ecuadorian. . .

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Fig. 1 Percentage change of Ecuadorian GDP in 2000–2021. Source: Compiled by the author based on Central Bank of Ecuador (2020b)

explained by the collapse of domestic demand and the weakening of external demand, which translated into a drop in exports of goods and services. In 2020 (Fig. 1), due to the COVID-19 pandemic and the slow resumption of activities, Ecuador’s GDP contracted by 7.8%, which represented that GDP per capita experienced a greater fall at a rate of 9%, compared to the 1.4% decrease registered in 2019. This fall reflects the decrease in the components of aggregate demand, highlighting the fall in investment, household consumption, general government spending, and exports of goods and services. In 2021 (Fig. 1), the Ecuadorian economy showed an economic recovery: it grew by 2.8%. This growth was driven by an increase in the components of domestic demand, particularly in the consumption expenditure of households, investment growth, an increase in the final consumption expenditure of the general government, the improvement of oil prices, and the mild recovery of exports and imports. The economic recovery largely depends on the ability of firms to re-generate sales and adequate profitability, which is good for the health of the business and for the entire economy because this translates into an increased number of jobs, consumption, contributions through taxes, and, finally, economic dynamization that will route to the country’s sustained recovery. For the current year of 2022, a slow recovery of the Ecuadorian economy is expected, which will depend on the scope of the policies implemented by the authorities to stimulate domestic demand, respond to social demands, promote productive reactivation, and reverse the fall in household incomes. In this scenario, the ECLAC forecasts that Ecuador’s GDP will grow by 2.6% in 2022. Nevertheless, this forecast is ultimately conditional on the ability to overcome the health crisis urgently, as well as in an international context, while waiting for the planet’s economy to recover its normal functioning.

3.1

Foreign Trade

Ecuador is a small country that is open to the world and dollarized. The analysis of the external sector is decisive due to the necessary generation and attraction of foreign exchange for its particular monetary scheme, as well as the restrictions it has in exchange and monetary policy. Within this dollarized monetary scheme that Ecuador is experiencing, it is essential to strengthen foreign exchangeproviding activities, such as the export of goods and services, the reduction of imports or their replacement with national production, and the issuance of debt for the financing of infrastructure necessary for progress. The analysis of the Ecuadorian trade balance is carried out below, which allows us to appreciate the behavior of the Ecuadorian economy with the different international economies. Table 1 shows the annual variations that the trade balance has experienced after the dollarization. As we can see, 22 years after the dollarization of the Ecuadorian economy, the balance of the trade balance has been loss-making for the country. This trend explains the high dependence of the national economy on the international prices of crude oil and the export of primary products (bananas, flowers, shrimp, and others), whose behavior has been cyclical, especially in recent years due to the public health emergency caused by COVID-19. With the dollarization of the Ecuadorian economy, as seen in Table 1, the trade balance shows a deficit over the 11 years between 2000 and 2021. However, these deficits do not show a significant negative balance due to high oil prices and increased demand for non-traditional products. In the years following the dollarization, from 2004 to 2008 (Table 1), a positive balance of the trade balance was observed; it grew at an annual rate of 2.14%; since international conditions were favorable for Ecuador, the real exchange rate stimulated exports, and the growth of the world economy increased external demand for the main export products.

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Table 1 Trade balance of Ecuador, 2000–2022 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022(III)

Export, $ million 4451 4926.63 4678.44 5036.12 6222.69 7752.89 10,100.03 12,728.24 14,321.32 18,510.60 13,799.01 17,489.93 22,322.35 23,764.8 24,750.9 25,724.4 18,330.6 16,797.7 19,066.1 21,652.1 22,329.4 20,355.4 26,699.2 2455.6

Import, $ million 2786 3468.63 4980.56 6005.59 6254.24 7575.17 9568.36 11,279.46 12,907.11 17,600.30 14,097.55 19,468.65 23,009.55 24,205.4 25,825.9 26,447.6 20,460.2 15,550.6 19,033.1 22,105.6 21,509.3 16,947.9 23,828.5 2345.3

Trade balance, $ million 1665 1458 -302.12 -969.47 -31.55 177.72 531.67 1448.79 1414.20 910.30 -298.54 -1978.73 -687.19 -440.61 -1075.01 -723.16 -2129.62 1247.04 32.96 -453.46 820.13 3407.49 2870.66 110.3

Percentage variation % -0.12 -1.21 2.21 -0.97 -6.63 1.99 1.72 -0.02 -0.36 -1.33 5.63 -0.65 -0.36 1.44 -0.33 1.94 -1.59 -0.97 -14.76 -2.81 3.15 -0.16

Source: Compiled by the author based on Central Bank of Ecuador (2020a)

As of 2009, Ecuadorian exports (Table 1) reversed their positive trend due to the international financial crisis. Since 2009, there has been a more accelerated dynamism of non-oil imports, linked related to the increase in domestic production and the National Government’s trade policy to boost the competitiveness of the Ecuadorian productive sector through the tariff deferral to certain items for the import of raw materials and capital goods. The accelerated dynamism of imports determined that the negative balance of the Trade Balance grew at an annual rate of 1.67% from 2009 to 2015. It is also worth noting that Ecuador completed the MultiParty Trade Agreement with the European Union (EU) in 2016, which entered into force in January 2017. Based on this agreement, domestic products entered the EU with significant reductions in tariffs, and the temporary benefits with the EU under the General System of Preferences were consolidated. In the same way, products from the EU have been entering since 2017 with reduced tariffs. If we add to this the dynamic development of some destinations, such as China, which currently constitutes the second destination export of domestic production, this Asian country is one of the countries where the demand for Ecuadorian products has increased the most, at an average annual rate of 32.9% between 1990–2020. The same trend is observed with the Russian and Vietnamese markets. In the

Vietnamese market, exports barely started in 2010. By 2019, Russia will become Ecuador’s third non-oil partner and Colombia—the fourth. These mentioned aspects show that the balance of the trade balance had positive balances from 2016. For 2020, exports were affected due to recorded events such as problems of the rupture of the pipeline and the health emergency that occurred in mid-March. Nevertheless, the balance of the trade balance was positive in that imports contracted due to the reduction in the purchasing power of the population, especially for imported consumer goods. Until the first semester of 2022, the balance of the Ecuadorian trade balance has been favorable, which explains the resuscitation of the global economy. Therefore, the national and international increase in purchasing power allows increasing exports and imports.

4

Conclusion

Dollarization in Ecuador generates periods of cyclical growth and high volatility in the rates of variation of GDP. As for the trade balance, the analyzed results indicate that the country’s international economic relations require encouraging national exports with the intention of achieving a favorable balance of the country’s trade balance.

Dollarization in Ecuador, Economic Growth, Trade Balance, Impact on Ecuadorian. . .

The research allows the author to establish that under the dollarization scheme that operates in Ecuador, the external sector is fundamental for the attraction of foreign exchange, which requires a monetary dollarization scheme to expand the exportable offer of products and services that are competitive in the international environment and that increase its degree of diversification in products and destinations. Within the dollarized monetary scheme that Ecuador is experiencing, it is essential to strengthen foreign exchangeproviding activities, such as the export of goods and services, the reduction of imports or their replacement with national production, as well as the issuance of debt for the financing of infrastructure necessary for development.

References Central Bank of Ecuador. (2020a). 20 years of dollarization of the Ecuadorian economy: Analysis of the external sector. Technical Note, 82, 1–33. Central Bank of Ecuador. (2020b). Monthly statistical information No. 2022 – August 2020. Accessed April 15, 2022, from https:// contenido.bce.fin.ec/documentos/PublicacionesNotas/Catalogo/ IEMensual/Indices/m2022082020.htm Central Bank of Ecuador. (n.d.). Monthly statistical information [IEM]. Accessed February 25, 2022, from https://contenido.bce.fin.ec/ home1/estadisticas/bolmensual/IEMensual.html Economic Commission for Latin America (ECLAC). (n.d.). Statistics and economic indicators. Accessed March 22, 2022, from http:// interwp.cepal.org/sisgen/ConsultaIntegrada.asp?idIndicador= 2050&idioma=e

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Edwards, S. (2001). Dollarization: Myths and realities. Journal of Policy Modeling, 23(3), 249–265. Lucero, V. G. (2016). Dollarization, bilateral exchange rate and trade: The case of Ecuador’s trade flows with Colombia and Peru in the period 2000–2014. Universidad Andina Simón Bolívar. Accessed March 20, 2022, from https://repositorio.uasb.edu.ec/bitstream/ 10644/5009/1/T1969-MRI-Lucero-Dolarizacion.pdf Mero, M. (2016). International economic relations, poverty and dollarization: The case of Ecuador. University of Guayaquil. Michelena, W. (2014). Dollarization and its impact on foreign trade period 2000–2012 (Master’s thesis). University of Guayaquil. Onur, T., Badri, K., & Togay, S. (2014). Effects of official dollarization in a small open economy: The case of Ecuador. Investigación Económica [Economic Research], 73(290), 51–86. Sierra, L. P., & Lozano, D. M. (2010). What do we know about dollarization and its effects on the economy of Latin Americans who adopted it? Revista de la Facultad de Ciencias Económicas [Magazine Faculty of Economic Sciences], 18(1), 119–132. Toscanini, M., Lapo, M. M., & Bustamante, M. A. (2020). Dollarization in Ecuador: A review of macroeconomic results in the last two decades. Información Tecnológica, 31(5), 129–138. Accessed February 11, 2022, from https://www.scielo.cl/pdf/infotec/v31n5/ 0718-0764-infotec-31-05-129.pdf Valdivieso Mora, A. F., Arias Jaramillo, A. A., & Arias Jaramillo, A. A. (2016). Impact of dollarization in Ecuador’s trade balance in the period 2000–2014. Sur Academia, 3(5), 25–36. Accessed March 10, 2022, from https://revistas.unl.edu.ec/index.php/suracademia/ article/view/257/235 World Bank. (2020). Annual GDP growth (%) – Ecuador. Accessed April 28, 2022, from https://data.worldbank.org/indicator/NY.GDP. MKTP.KD.ZG?locations=EC Zambrano, P. P. (2018). Dollarization in Ecuador: 16 years later. Revista de Instituciones. Ideas y Mercados (RIIM), 67, 1–34. Accessed May 2, 2022, from https://riim.eseade.edu.ar/wp-content/uploads/2018/ 11/RIIM-67-1.-Zambrano-Pont%C3%B3n-La-dolarizaci%C3% B3n-en-Ecuador.pdf

Integration Processes and the Economy of Peru: Current Trends Inna V. Lazanyuk

and Montaser H. Abou Zahr Diaz

Abstract

JEL Codes

The paper aims to identify the impact of the results of economic integration on the economy of Peru. The authors used a comprehensive economic analysis of world economic relations and an analysis of commodity flows in Latin America. The authors revealed the role of integration associations in the economic development of today’s countries and assessed the contribution of certain integration blocs and their role in the development of Latin American countries, including Peru. It is concluded that the most effective integration blocs in the Latin American region today are MERCOSUR, CELAC, and the Pacific Alliance, the latter of which has the greatest potential. As a result of the research, it was revealed that Peru’s participation in several regional and supranational integration associations expanded the country’s presence in the global space and improved foreign trade performance, including with a number of countries of the Andean Community and APEC. Free trade agreements with China, the EU, and the USA have proved to be mutually beneficial and brought the expected results. During the analysis, the authors concluded that promising areas in the integration processes for Peru include the continued participation in the Andean Community to strengthen foreign economic relations with neighboring countries, the participation in the Pacific Alliance and APEC to expand its presence in the world, and strengthening economic relations with China as a key trading partner.

F13 · F14 · F15 · F43 · F62 · N76

Keywords

Latin America · Integration processes · Integration blocs · Economic development · Andean community · APEC · Pacific Alliance I. V. Lazanyuk (✉) · M. H. Abou Zahr Diaz Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; [email protected]

1

Introduction

The issues of integration in Latin America have been widely studied. The authors subdivide the Latin American integration process into phases of “old,” “open,” and “post-liberal” regionalism (Kheifets & Konovalova, 2019). In their works, the authors pay much attention to the opportunities for developing the foreign economic sector of the economy of Latin America (Comini & Frenkel, 2016; Lavut, 2020; Perrotta, 2018; Zhilkin & Chavarry Galvez, 2020) and the resumption of Russian-Latin American economic cooperation, which was caused by “vaccine diplomacy” during the COVID-19 pandemic (Yakovlev, 2021). The authors also considered the issue of free trade between the European Union (EU) with the participation of non-governmental organizations. On the one hand, examples are given of the efforts of European countries in the partnership between the EU and the Latin American countries and active cooperation in solving global problems (Kanunnikov, 2020). On the other hand, researchers talk about many unresolved problems in relations with the EU (Ivanovsky, 2020). For example, certain aspects of the development of some integration associations, including MERCOSUR, UNASUR, and the Pacific Alliance, were considered within the framework of Latin America (World Bank, n.d.; Yakovlev, 2021). However, despite the relevance of integration processes for developing countries, including Latin American countries, the issues of the impact of integration on the economy of particular countries of the world are not fully understood. In the scientific literature, there are very few studies on the economy of Peru, especially on the role of integration processes on the country’s economy.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_42

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Materials and Methods

The specifics of the development of the Latin American region, including within the framework of integration processes, are studied in the works of Kanunnikov (2020), Lavut (2020), Zhilkin and Chavarry Galvez (2020), Ivanovsky (2020), Comini and Frenkel (2016), and Perrotta (2018). Aspects of the development of some integration associations, including MERCOSUR and the Pacific Alliance, were touched upon in the works of Posashkova (2018) and Pyatakov (2018). Other issues of integration associations in Latin America were dealt with by Kheifets and Konovalova (2019), Lavut (2020), and Yakovlev (2021). Tayar (2018) studied the processes of integration of Latin American countries in the context, including foreign trade. In this work, the authors used general and special methods of scientific knowledge, including a comprehensive economic analysis of world economic relations, statistical analysis, analysis of commodity flows, and system analysis of economic systems. The developed methodological approach is based on international trade data obtained from various platforms such as the Peruvian Center for Strategic Studies, the Peruvian Institute of Statistics and Informatics, the IMF (n.d.), the World Bank, and others.

3

Results

Integration processes for the countries of Latin America were a factor in accelerating economic development, contributed to the solution of many political problems, and increased the role of the countries of the region in the world economy. Peru

began the integration process in 1997 by joining the Andean Community (Grupo Andino, n.d.). Peru’s network of trade agreements from 1997 to 2020 is shown in Fig. 1. Peru has been one of the dynamically developing countries in Latin America in the last two decades. However, the country is considerably dependent on the global prices of natural resources. The country is characterized by a low level of infrastructure development, poor diversification of the economy, and an insufficient level of socio-economic development. The COVID-19 pandemic and political instability in the country have brought negative consequences for the economy and socio-economic development of Peru in recent years, as evidenced by the GDP growth indicators for 2019–2020 (Fig. 2). In general, one can positively assess the participation of Peru in the integration processes. Currently, one of the factors in the development of the Peruvian economy is foreign trade, the volume of which is expanding due to the integration of the country. The dynamics of foreign trade indicators before and after Peru joined the integration alliances have changed markedly. For example, before joining the Andean Community (in 1989), the trade between the countries (Bolivia, Colombia, and Ecuador) amounted to 340 million dollars, which seriously increased to $1.17 billion by 2001. Due to the COVID-19 pandemic, in 2020, exports and imports decreased by 28%. However, in 2021, they almost returned to the level of 2019. Peru’s integration into the world economic space is also taking place through supranational associations, including APEC. Peru has been a member of APEC since 1998. This organization is one of the most important in the world, which includes 21 countries and accounts for 62% of world GDP.

Fig. 1 Peru’s main trading network for 1997–2020. Source: Developed and compiled by the authors

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Integration Processes and the Economy of Peru: Current Trends

Trade growth (%, constant prices) (2005 = 100) GDP growth (%, constant prices) (2005 = 100) right axis

According to SUNAT reports, APEC trade with Peru grew by 34% in 2021 due to increased trade with major partners such as China (SUNAT, 2022). In 2021, after two years of decline (2019–2020), trade between Peru and APEC hit a record high ($68.474 billion) thanks to a combined increase in imports (+36%) and exports (+33%). Except for the Philippines (-18%), trade with other countries increased, mainly with Russia (+99%). Peru’s main partners are China and the USA; trade with them has increased by 42% and 30%. Also, 23% of trade between Peru and APEC is carried out with the main geographical partners: China, the USA, South Korea, Canada, Chile, and Japan. A major integration into which Peru is included is an agreement with MERCOSUR (n.d.), signed in 2005. MERCOSUR is the first supplier of agricultural commodities to Peru, with Argentina being the most important country (70% of the total). After four years of continuous growth, trade between Peru and MERCOSUR fell by 22% in 2020 due to a sharp decline in exports (-45%) and, to a lesser extent, imports (-14%). In general, trade with the four countries of the bloc declined, mainly with Brazil (-30%) and Paraguay (-31%). The sector that contributes the most to Peru’s exports to MERCOSUR is mining (44%), followed by chemicals (15%), agriculture (11%), hydrocarbons (7%), and textiles (6%). In 2020, Peru’s exports to MERCOSUR amounted to $900 million, mainly to Brazil (84%), followed by Argentina (12%) and Uruguay (2%). The bloc’s main import products are agricultural products, purchased mainly from Argentina (70%) and, to a lesser extent, from Brazil (17%) and Uruguay (7%).

The EU ranks third in the geographic structure of Peru’s exports. Peru has a number of cooperation agreements with the EU, including a free trade agreement signed in 2013. Additionally, trade agreements with the EU have been signed within the framework of MERCOSUR (Lavut, 2020) and the Pacific Alliance (European External Action Service, 2019; Alianza del Pacifico, n.d.). Under the agreement, Peru received preferential access to 99.3% of its agricultural products and 100% of its industrial products in the European market. For example, Peruvian asparagus, avocados, coffee, and artichokes enter the EU without tariffs (European Commission, 2019; European External Action Service, 2019). Germany, Spain, the Netherlands, and Italy are the most important partners (72% of trade between Peru and the EU). Trade with these countries exceeds one billion dollars (a high level of trade). A quarter (26%) of Peru-EU trade is with eleven countries: Belgium, France, Sweden, Poland, Bulgaria, Finland, Denmark, Austria, Ireland, Czech Republic, and Portugal (European Commission, 2019). Trade with these countries exceeds $50 million (average turnover). Based on the statistical data, it is noticeable that there was no significant increase in exports from Peru to European countries. Moreover, in 2019–2020, there was a decrease in the volume of exports of Peruvian goods. A similar situation was observed in terms of imports of goods from the EU to Peru. After falling by 12% in 2020, Peru-EU trade grew by 28% in 2021, thanks to an increase in exports (+33%). The increase in exports was mainly due to the growth in sales of natural gas (+587%) and minerals (+45%). Peru imports goods from all EU countries, mainly from Germany (25%), Spain (18%), and Italy (16%). In 2021,

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pharmaceutical products were the leaders in purchases in the EU, particularly in Germany (31%). Similarly, cars are mostly imported from Germany (39%). Biodiesel, wood/ paper, and textiles/clothing are sourced from Spain (80%, 30%, and 18%, respectively). It seems important for Peru to develop cooperation with other countries not only within the framework of regional integration associations but also within the framework of supra-regional alliances and in the form of bilateral cooperation. To expand the volume of foreign trade and attract additional foreign investment, loans, and technologies, the participation of the countries of Latin America and Peru, in particular, is necessary not only in regional integration associations but also to strengthen economic cooperation with other major markets and integration unions. Nevertheless, many researchers insist on the primary role of regional integration alliances in Latin America. Thus, F. Peña believes that regional integration is one of the three basic tasks for Latin American countries, along with determining their positions concerning the restructuring of the existing international economic system and the choice of a new strategy for inclusion in the world economic system (Pena, 2017). Thus, the multilateral development of Peru’s foreign economic activity seems relevant: within the framework of individual bilateral contacts with other countries, participation in regional integration associations, and interaction within the framework of supra-regional integration alliances. Such an integrated approach can considerably strengthen Peru’s position in the Latin American region and in other world markets. As for regional alliances, the most effective direction for the development of Latin American countries is a convergence of the two largest integration blocs—MERCOSUR and the Pacific Alliance, which many researchers are already talking about (Comini & Frenkel, 2016). Some authors, including those from Latin American countries, put forward the idea of creating a global cooperation zone for all countries of Latin America and the Caribbean, for which a large-scale regional program for the development of infrastructure, transport, and communications should be adopted (Iglesias, 2017). For Peru, in particular, the greatest emphasis should be placed on development within the framework of the Pacific Alliance as the most promising integration association in Latin America, as well as on expanding participation in APEC. Another promising direction is the expansion of cooperation with other countries that are not key partners but which are politically and economically beneficial for Peru.

4

Conclusion

The countries of Latin America are quite deeply integrated into the world economy. However, it is necessary to accelerate the processes of regional integration to include the region

in the global markets. In the conditions of political and economic turbulence experienced by most countries of the world, including Latin American countries, it seems important to minimize negative trends by strengthening diverse cooperation between countries. Integration processes that contribute to the expansion of cooperation between countries are of particular interest. For Peru, the current relevance is further participation in the Andean Community to strengthen foreign economic relations with neighboring countries. Another promising direction is the participation in the Pacific Alliance and APEC. As far as Peru’s individual trading partners are concerned, mutually beneficial cooperation can continue to develop mostly with China. Special attention should be paid to markets that were not traditional for Peru (e.g., Russia and India). The key provisions and conclusions of this research can be used in the further study of the problems of integration processes in Latin America, including Peru as a rapidly developing economy in the Latin American region.

5

Data Availability

Data on the trade of Peru within the framework of the integration associations of APEC, MERCOSUR, and the Andean Community, confirming the findings of the study, are available in https://figshare.com/ with id https://doi.org/10.6084/ m9.figshare.20218439.v1. Acknowledgements This paper has been supported by the RUDN University Strategic Academic Leadership Program.

References Alianza del Pacifico. (n.d.). Lineamientos sobre la participación de los Estados Observadores de la Alianza del Pacifico. Accessed March 5, 2022, from https://alianzapacifico.net/wp-content/uploads/2015/ 07/Lineamientos-Observadores.pdf Comini, N., & Frenkel, A. (2016). Unasur: De proyecto refundacional al fantasma del Sudamexit. Regional de América Latina y el Caribe, 13, 181–208. European Commission. (2019). EU-Mercosur trade agreement: The Agreement in Principle (adopted July 1, 2019). Brussels, Belgium. Accessed April 5, 2022, from https://trade.ec.europa.eu/doclib/press/ index.cfm?id=2048 European External Action Service. (2019, September 25). Joint Declaration on a partnership between the States Parties to the Framework Agreement of the Pacific Alliance and the European Union. Accessed April 5, 2022, from https://eeas.europa.eu/headquarters/ headquarters-homepage/67929/joint-declaration-partnersWpbetween-states-parties-framework-agreement-pacific-alliance-and_ en Grupo Andino. (n.d.). Official website. Accessed March 5, 2022, from https://grupoandino.org/

Integration Processes and the Economy of Peru: Current Trends Iglesias, E. V. (2017). Reflexiones sobre la coyuntura internacional y regional. Estudios Internacionales, 49, 39–47. https://doi.org/10. 5354/0719-3769.2017.47531 International Monetary Fund (IMF). (n.d.). Data. Accessed April 26, 2022, from https://data.imf.org/ Ivanovsky, Z. V. (2020). Political shifts in Latin America and problems of relations with the EU. Modern Europe, 7, 144–154. https://doi. org/10.15211/soveurope72020144154 Kanunnikov, A. A. (2020). Non-governmental organizations and the EU-MERCOSUR trade agreement. Latin America, 1, 47–53. https:// doi.org/10.31857/S0044748X0007758-2 Kheifets, L. S., & Konovalova, K. A. (2019). Latin American reflections on integration processes: From theory of peripheral capitalism to “Sudamexit”. Vestnik RUDN. International Relations, 19(2), 218–233. https://doi.org/10.22363/2313-0660-2019-19-2-218-233 Lavut, A. A. (2020). Search for a Latin American development strategy in the context of global economical instability. Latin America, 1, 33–46. https://doi.org/10.31857/S0044748X0007757-1 MERCOSUR. (n.d.). Official website. Accessed April 5, 2022, from https://www.mercosur.int/en/ National Administration of Customs and Tax Administration of Peru – SUNAT. Accessed April 5, 2022., from http://www.sunat.gob.pe/ operatividadaduanera/index.html Pena, F. (2017). América Latina en un mundo incierto y turbulento: Impacto sobre las estrategias de integración regional. Estudios

243 Internacionales, 113–124. Accessed April 5, 2022, from https:// scielo.conicyt.cl/pdf/rei/v49nspe/0719-3769-rei-49-00113.pdf Perrotta, D. V. (2018). El campo de estudios de la integración regional y su aporte a las Relaciones Internacionales: una mirada desde América Latina. Relaciones Internacionales, 38, 9–39. https://doi.org/10. 15366/relacionesinternacionales2018.38.001 Posashkova, A. V. (2018). The Pacific Alliance: Assessment of the potential and the outcomes of the first five. Social and Humanitarian Knowledge, 1, 300–305. Pyatakov, A. N. (2018). Unnoticed anniversary. Ten years of UNASUR in the conditions of regional political uncertainty. Latin America, 2, 29–45. Tayar, V. M. (2018). The European Union and Latin America: Interregional economic cooperation in the XXI century. Actual Problems of Europe, 3, 23–43. World Bank. (n.d.). Data. Accessed April 26, 2022, from https://data. worldbank.org/ Yakovlev, P. P. (2021). Russia and Latin America: Constants and variables in trade and economic relations. Outlines of Global Transformations: Politics, Economics, Law, 14(3), 209–226. https://doi.org/10.23932/2542-0240-2021-14-3-12 Zhilkin, O. N., & Chavarry Galvez, W. P. (2020). Analysis of current trends in assessing the country’s potential in international trade (on the example of Peru). RUDN Journal of Economics, 28(2), 239–253. https://doi.org/10.22363/2313-2329-2020-28-2-239-253

The Impact of Socio-economic Inequality on the Relations Between the European Union Countries and the Assessment of Strategic Areas for its Reduction Inna V. Andronova , Tatiana S. Malakhova and Dina B. Kanagatova

Abstract

The issue of inequality between economic bodies have always interested scholars worldwide. Nowadays, there are countries with different models of economic development, scientific and technical potential, and socio-cultural characteristics in the EU. This impacts the increase in economic inequality and the level of poverty in individual partner countries of the union. The presented research aims to study key strategies and programs, particularly the “European Pillar of Social Rights,” implemented by the EU countries in today’s context. As a theoretical and methodological basis, the research uses the historicallogical approach, dialectical principles and contradictions, and the method of scientific abstraction. The processsystem approach, employed in an in-depth analysis of the key economic indicators of the union members, was critical in rationalizing the need to stabilize macroeconomic indicators in the EU countries and reduce socioeconomic inequality when implementing key strategies and programs for the prosperity of EU countries. This research examines the key programs implemented in the EU countries, assesses their timeliness and pragmatism, and presents the positions of leading Russian and international scholars on the issue of socio-economic inequality between the EU countries and priority areas for its reduction in current realities. The research focuses on calculating economic indicators, specifically the average monthly nominal wages of employees in certain countries of the EU, and assessing the population’s consumer confidence index, the poverty rate, and the income concentration

I. V. Andronova · D. M. Madiyarova RUDN University, Moscow, Russia T. S. Malakhova (✉) Kuban State University, Krasnodar, Russia D. B. Kanagatova NARXOZ University, Graduate School of Business Republic of Kazakhstan, Almaty, Kazakhstan

, Diana M. Madiyarova

,

index (Gini coefficient). The research presents the main principles and features of the “European Pillar of Social Rights” of the EU and explores the key areas that this program will affect in the medium and long term. Based on this, a scheme has been formed, which presents the key principles of the proposed program and identifies the main opportunities that partner countries will be able to receive after its implementation. Keywords

Integration group · Foreign economic relations · European Union · Economic inequality · Wages

JEL Codes

F02 · F15 · F63 · F66

1

Introduction

Nowadays, the global economy has many issues and threats that affect all countries and regions worldwide. The EU is no exception. In today’s context, the EU faces serious problems and contradictions occurring in the world economy (Malakhova, 2019, pp. 213–217). External and internal factors significantly affect their relationship within the integration group (Malakhova & Kolesnikov, 2019, pp. 38–41). It is essential to underline that the COVID-19 pandemic has made significant adjustments to the relationship prospects between the EU partner countries and the development of their socio-economic sphere. The governments of the partner countries, EU institutions, organizations, and other bodies develop priority areas to combat poverty and unemployment in the integration group. To stabilize the situation in the labor market, governments of countries concentrate on implementing a “New Industrial Strategy for Europe”

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_43

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(European Commission, 2020b) and a “New Circular Economy Action Plan for a cleaner and competitive Europe” (European Commission, 2020a). Moreover, EU institutions currently develop mechanisms and tools to implement the “European Pillar of Social Rights” in the integration group, which will reduce the level of poverty, inequality, and unemployment in EU countries (European Commission, n.d.-b). The mentioned documents and programs form a perspective for developing further relations between various economic bodies of the integration group. Therefore, we examine the positions of scholars and research schools that analyze the development aspects of the socio-economic spheres in the EU countries that differ in economic development, sociocultural characteristics, and scientific and technical potential.

2

Materials and Method

In today’s context, the problems of poverty, unemployment, and inequality have affected many countries in the world economy. The EU is no exception. Thus, Dauderstädt calculates and publishes the estimates of pan-European inequality, which consider differences in income within the country and between countries (Dauderstädt, 2019). In all EU countries, the unemployed face the risk of falling into the poor group because they have no income. However, according to Bruckmeier and Rhein, there is also a significant heterogeneity between the EU countries in terms of income (Bruckmeier & Rhein, 2018, pp. 1301–1305). Scholars focus on changes in socio-economic inequality between countries and the level of poverty, referring to historical experience, provide empirical data on poverty trends using various indicators, and explore the economic policies of partner countries to combat poverty, their programs, strategies, and plans (Jenkins, 2020, pp. 129–155). As Ebbinghaus underlines, starting from 2008 after the world crisis, the unemployment rates significantly diminished. However, inequality and poverty among older people have tremendously expanded before the COVID-19 pandemic. Thus, despite the COVID-19 pandemic, the current pension rates in many places are not sufficient to cover the needs of older people to have a good life (Ebbinghaus, 2021, pp. 440–455). Coppola and Laurea focus on the southern countries of the EU. They highlight that Italy is a prime example of poverty and economic inequality research. Italy is characterized by dramatic territorial dualism: the living conditions in the southern part are way harsher compared to other parts of the country. According to the research findings, the Italian social security system does not fully protect low-income households from poverty. Italy’s particular policies should target older people and households with children (Coppola & Laurea, 2016). Based on the mentioned studies, this research analyzes individual socio-economic

indicators of the EU countries and evaluates the programs and strategies planned to be implemented by governments of the integration group countries in the future (Malakhova et al., 2019, pp. 195–202).

3

Results

The analysis of the research works shows the acute economic and social inequality issues that exist in EU countries. It is vital to analyze individual socio-economic indicators of the EU countries to identify problems and contradictions in this field. The research focuses on assessing employees’ average monthly nominal wages in the specified EU countries from 2012 to 2018. In Germany, the average monthly nominal wage of employees was 2908 euros in 2012, 2974 euros in 2013, 3048 euros in 2014, 3133 euros in 2015, 3199 euros in 2016, 3287 euros in 2017, and 3357 euros in 2018. In general, the dynamics for this indicator in Germany are positive. The Netherlands has one of the highest average monthly nominal wages of employees from all EU countries for the analyzed period. It was 3671 euros in 2012, 3759 euros in 2013, 3773 euros in 2014, 3823 euros in 2015, 3864 euros in 2016, 3896 euros in 2017, and 3947 euros in 2018. In Slovakia, same as in Latvia and Lithuania, there was a moderate increase in employees’ average monthly nominal wage from 2012 to 2018. In Finland, the same as in the Netherlands, employees’ average monthly nominal wages were high for the analyzed period. In 2012, it was 3258 euros, 3302 euros in 2013, 3346 euros in 2014, 3391 euros in 2015, 3442 euros in 2016, 3458 euros in 2017, and 3513 euros in 2018. Like in Finland, there was a positive trend in the studied indicator in France. In general, based on the analysis of individual EU countries, the most significant increase in the average monthly nominal wage of employees over the specified period occurred in Germany (Federal State Statistics Service of the Russian Federation, 2018, pp. 103–107). Further, the research tracks the changes in the real wages of employees in certain EU countries from 2015 to 2021 and calculates the forecast for this indicator until 2023 (Table 1). In Bulgaria, the change in the real wages of employees ranged from 106.9% in 2015 to 108.4% in 2021. The forecast data shows a further increase in this indicator. It could be 108.3% in 2022 and 108.7% in 2023. Almost the same trend is observed in Hungary. The change in the real wages of employees stably increased from 97.2% in 2015 to 117.2% in 2021. As for Germany, the changes in real wages of employees fluctuated from 102.5% in 2015 to 100.9% in 2021. Based on the calculations, the research defines no significant changes in the analyzed indicator in 2022–2023. In Spain, the real wages of employees for the analyzed period

The Impact of Socio-economic Inequality on the Relations Between the European Union. . .

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Table 1 Analysis of changes in real wages of employees in the selected EU countries for 2015–2021 and calculation of this indicator until 2023, % of the previous year Countries Bulgaria Hungary Germany Spain Italy Latvia Lithuania Netherlands Poland Slovakia Finland France Czech Republic Estonia

2015 106.9 97.2 102.5 102.8 101.0 106.7 106.5 100.6 104.3 103.8 101.5 101.0 102.5 106.4

2016 108.8 104.0 101.6 99.7 101.0 104.9 107.4 100.9 104.0 105.2 101.1 100.9 103.9 107.4

2017 107.3 108.3 101.0 98.0 98.9 104.7 104.8 99.5 103.9 104.2 99.7 101.2 104.3 103.0

2018 107.4 107.9 101.7 98.8 99.7 105.1 107.0 100.3 105.3 104.1 100.6 101.4 106.3 103.8

2019 108.5 111.4 101.3 97.5 99.1 104.3 107.2 100.3 105.4 105.1 100.3 101.6 106.8 104.2

2020 108.2 115.4 100.9 96.0 98.5 103.8 107.4 100.0 105.7 104.3 99.8 101.7 108.1 103.0

2021 108.4 117.2 100.9 95.6 98.0 103.8 107.3 99.9 106.1 104.7 99.7 101.9 109.1 102.0

Forecast 2022 108.3 117.4 100.9 94.9 97.9 103.4 107.6 100.1 106.7 104.5 99.8 102.1 109.5 101.2

2023 108.7 117.7 100.5 93.6 97.2 102.9 108.4 99.9 107.2 104.8 99.3 102.2 109.3 101.3

Source: Created by the authors based on Federal State Statistics Service of the Russian Federation (2020, pp. 105–155)

were below 100%, except for 2015. The forecast data shows a decline in the real wages of employees in Spain. This indicator in Italy, as well as in Spain, has a similar trend. Comparatively, Latvia and Lithuania have rather high indicators of real wages for the analyzed period. In Latvia, this indicator varied from 106.7% in 2015 to 103.8% in 2021, decreasing by 2.9% in 2021 compared to 2015. In Lithuania, this indicator is higher than in Latvia. The calculations show a further increase in real wages in this country. In the Netherlands, the analyzed indicator ranged from 99.5% to 100.9% from 2015 to 2021. In Poland, there were rather high figures for the real wages of employees. It fluctuated from 104.3% in 2015 to 106.1% in 2021. The wages might increase by 2.9% in 2023 compared to 2015. In Slovakia, there are fairly stable figures for the real wages of employees. This indicator increased by 0.9% in 2021 compared to 2015. In Finland, the change in the real wages of employees ranged from 101.5% in 2015 to 99.7% in 2021. Based on the calculations, this indicator might be 99.8% in 2022 and 99.3% in 2023. In France, the indicator did not change significantly over the analyzed period. It changed from 101.0% in 2015 to 101.9% in 2021. Our forecast data shows its further increase. It might be 102.1% in 2022 and 102.2% in 2023. As for the Czech Republic, this indicator might increase. In Estonia, the change in the real wages of employees ranged from 106.4% in 2015 to 102.0% in 2021. Overall, many EU countries have a positive trend for the analyzed indicator. Moreover, it is important to analyze other indicators that reflect the population’s level and life quality. In this research, we focus on an important economic indicator, such as a

consumer confidence index of the population of individual EU countries. Figure 1 presents data on the consumer confidence index of the population for 2019 (Federal State Statistics Service of the Russian Federation, 2019, pp. 82–104). The data shows that this indicator is negative (-) in most EU countries. If we analyze the countries of the Southern region, the mentioned indicator in 2019 equaled 6.8% in Greece, 10.3% in Spain, 16.1% in Italy, 6.9% in Cyprus, 6.2% in Portugal, etc. Only in Malta, the consumer confidence index of the population was positive in 2019; it amounted to 4.9%. This indicator is fragile and requires attention, especially in the Central and Eastern European countries. For instance, it was 22.7% in Bulgaria, 5.0% in Hungary, 4.6% in Latvia, 6.8% in Romania, 8.7% in Slovakia, 13.6% in Slovenia, 0.6% in Estonia, and—0.3% in the Czech Republic. The consumer confidence index of the population in 2019 was positive only in Lithuania and Poland (4.4 and 3.1%, respectively). Nevertheless, it is significant to specify the fact that in the countries of Western Europe, this indicator was on a negative trajectory. For example, in 2019, the consumer confidence index of the population was 4.3% in Austria, 12.0% in Belgium, 2.0% in Germany, 2.7% in Luxembourg, 7.4% in the Netherlands, and 6.0% in France. Overall, the average index for the 27 EU countries in 2019 was—6.3%. Based on this, we analyzed the poverty rate and the income concentration index (Gini coefficient) in the selected EU countries. Different countries apply different methodological approaches to determining the minimum level of consumption (income), called the poverty threshold. An example of calculating the poverty rate is presented below (Government of the Russian Federation, 2019):

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Spain

Romania

Italy

Portugal Poland Netherlands Malta

Cyprus Latvia Lithuania Luxembourg

Fig. 1 Assessment of the consumer confidence index of the population in the EU countries for 2019, %. Source: Created by the authors based on Federal State Statistics Service of the Russian Federation (2020, pp. 105–155)

X Т ðiÞ = ХВðiÞ × CТ ,

ð1Þ

where: ХB(i)—the value of the “Poverty rate” indicator in the economic body for a particular year, %; CТ—the target coefficient of poverty reduction. The proportion of the population below the poverty threshold was 22.0% in Bulgaria, 14.9% in Hungary, 22.5% in Latvia, 22.2% in Lithuania, 15.4% in Poland, 23.6% in Romania, 12.6% in Slovakia, 21.8% in Estonia, and 9.7% in the Czech Republic. The income concentration index (Gini coefficient) does not exceed 50% in EU countries. For instance, this index equaled 29.7% in Austria, 27.4% in Belgium, 31.9% in Germany, 31.6% in France, 28.7% in Denmark, 32.8% in Ireland, 34.9% in Luxembourg, and 28.5% in the Netherlands. As for the Central and Eastern European countries of the integration group, the figures are the following: 40.4% in Bulgaria, 25.2% in Slovakia, 24.2% in Slovenia, 24.9% in the Czech Republic, and 30.4% in Estonia and others. If we analyze this indicator in the countries of the Southern region, then the income concentration index is 34.4% in Greece, 34.7% in Spain, 35.9% in Italy, and 33.8% in Portugal. The income concentration index is 27.4% and 28.8% in Finland and Sweden. Based on the performed analysis, the authors underline that not all economic indicators of the EU countries in the population’s level and life quality show a positive trend. The COVID-18 pandemic has significantly obstructed economic ties and industries in Western Europe, Southern Europe, and Central and Eastern Europe. In its turn, it could lead to an uneven recovery in countries with varying levels of socio-economic development.

As highlighted in the Programming document for 2021–2024, “Towards recovery and resilience,” the crisis caused by the COVID-19 pandemic has shaken the EU labor market, triggering massive unemployment, thus, making it challenging to forecast any economic prospects for any sector of EU countries (The European Foundation, 2020). Thus, the EU countries are committed to combating poverty and promoting social inclusion as part of the transformation stipulated in the “Europe 2020: A Strategy for Smart, Sustainable and Inclusive Growth” (European Commission, 2010). According to the European Commission’s data, over 120 million people in the integration group could fall into poverty in 2008. Hence, the leaders of the partner countries of the union pledged to improve financial situations and socially include a minimum of 20 million people by 2020 (European Commission, 2021). Nowadays, some issues in this area remain: 22.4% of the EU population are poor and socially excluded, including 24.9% of all children in Europe, 23.3% of women, and 9.3% of Europeans living in families where no one has a job and other critical issues (European Commission, n.d.-a). Thus, studying the key programs, strategies, and projects developed by the authorities of the EU countries in today’s realities is crucial to combat poverty and inequality. Thus, the research concentrates on the “European Pillar of Social Rights” (European Commission, n.d.-b).

4

Discussion

“The European Pillar of Social Rights” is a high-stake document that focuses on 20 core principles that could guide the European Region towards a fairer, inclusive development of all partner countries. The Commission has already presented an Action Plan to implement this project, strengthening social rights in the EU countries. It has put forward specific initiatives to implement the core principles specified in the document. The Action Plan was discussed and developed jointly with EU institutions, national, regional, and local authorities, and civil society representatives. Based on this, the research examines in more detail these principles and assesses their impact on European society (Fig. 2). According to Fig. 2, the document splits all 20 core principles into three complementary chapters. The first chapter of the document, which strives to create equal opportunities and improve employability, underlines the necessity to provide, for example, quality education, onoff-job training, and follow the principles of life-long learning. It points out that every EU citizen has the right to access high-quality education, be free of any seclusion, and receive training to sustain skills that will help them have a decent social life and face the labor market challenges. The second chapter of the document implies enhancing labor

The Impact of Socio-economic Inequality on the Relations Between the European Union. . . Fig. 2 The key areas to implement the European Pillar of Social Rights in the integration group. Source: Created by the authors based on European Commission (n.d.-b)

249

European Pillar of Social Rights covering 20 principles of new and more effective rights of the EU citizens

There are three key areas

Chapter I: Equal opportunities and access to the labor market Education, training, and life-long learning. Gender equality. Equal opportunities. Active support to employment.

Chapter II: Fair working conditions Secure and adaptable employment. Wages. Information about employment conditions and protection in case of dismissals. Social dialogue and involvement of workers. Work-life balance. Healthy, safe, and well-adapted work environment and data protection.

Chapter III: Social protection and inclusion Childcare and support to children. Social protection. Unemployment benefits. Minimum income. Old age income and pensions. Health care. Inclusion of people with disabilities. Long-term care. Housing and assistance for the homeless. Access to essential services

Formed on a shared commitment by national governments, European Union institutions, and key stakeholders to combat poverty and social exclusion

conditions for EU citizens. It highlights the necessity to employ innovative approaches to work that will help the employees work in better working conditions, engage in business, and become diligent self-employers. Moreover, it specifies that employees should receive a decent and fair wage to live a life but not survive. Thus, this chapter covers a wide range of areas of labor relations. The third chapter presents, for example, ensuring social protection and inclusion, like providing childcare and support, having unemployment benefits in place, considering old age income, paying decent pensions, offering high-quality health care services, and other critical aspects. As for the minimum income, the document underlines that every person who does not have sufficient resources should have access to vital goods and services to have a good life (European Commission, n.d.-b). Indeed, institutions and organizations directly related to this area will transform and become more committed when implementing these principles. Thus, these core principles will help the EU countries reduce unemployment rates, protect certain segments of the population from poverty, and avoid exclusion.

5

Conclusion

First, this research studied the positions of European scholars involved in assessing and analyzing the level of poverty, unemployment, and economic inequality in the integration group. The research indicates that many countries of the integration group were seriously affected during the

COVID-19 pandemic and by other external and internal threats. Primarily, they influenced the countries located in Central and Eastern Europe, particularly Bulgaria and Romania, and the countries of the Southern region. Second, we defined positive dynamics in employees’ average monthly nominal wages in certain EU countries. The assessment of the consumer confidence index of EU countries’ population for 2019 in most countries of the integration group was negative. Particular attention in the analysis of socio-economic inequality between the EU countries was paid to the poverty rate and the income concentration index. Third, we researched and analyzed the programs and strategies developed by the authorities of the integration group, specifically, the “European Pillar of Social Rights.” Based on this, we developed a scheme that presents the core principles of the proposed program and describes the main opportunities that partner countries might receive after its implementation. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project № 060121-0-000.

References Bruckmeier, K., & Rhein, T. (2018). Poverty risk of the unemployed in six European countries: why is it higher in some countries than in others? Applied Economics Letters, 26(16), 1301–1305. https://doi. org/10.1080/13504851.2018.1558329

250 Coppola, L., & Laurea, D. (2016). Dynamics of persistent poverty in Italy at the beginning of the crisis. Journal of Population Sciences, 72, 3. https://doi.org/10.1186/s41118-016-0007-x Dauderstädt, M. (2019, January 15). Addressing poverty and inequality in Europeю Social Europe. Accessed October 4, 2021, from https:// socialeurope.eu/poverty-and-inequality-in-europe Ebbinghaus, B. (2021). Inequalities and poverty risks in old age across Europe: The double-edged income effect of pension systems. Social Policy & Administration, 55(3), 440–455. https://doi.org/10.1111/ spol.12683 European Commission. (2010). EUROPE 2020: A strategy for smart, sustainable and inclusive growth (March 3, 2010, No. COM(2010) 2020 final). Brussels, Belgium. Accessed October 4, 2021, from https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri= CELEX:52010DC2020&from=EN European Commission. (2020a). A new circular economy action plan: For a cleaner and more competitive Europe (March 11, 2020 No. COM(2020) 98 final). Brussels, Belgium. Accessed October 4, 2021, from https://eur-lex.europa.eu/legal-content/EN/TXT/? qid=1583933814386&uri=COM:2020:98:FIN European Commission. (2020b). A New Industrial Strategy for Europe (March 10, 2020, No. COM(2020) 102 final). Brussels, Belgium. Accessed October 4, 2021, from https://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:52020DC0102&from=EN European Commission. (2021). The European pillar of social rights action plan. Accessed October 3, 2021, from https://op.europa.eu/ webpub/empl/european-pillar-of-social-rights/downloads/ KE0921008ENN.pdf European Commission. (n.d.-a). Employment, social affairs & inclusion. Accessed October 4, 2021, from https://ec.europa.eu/social/main. jsp?catId=751&langId=en European Commission. (n.d.-b). European pillar of social rights. Accessed October 3, 2021, from https://ec.europa.eu/info/strategy/ priorities-2019-2024/economy-works-people/jobs-growth-andinvestment/european-pillar-social-rights_en Federal State Statistics Service of the Russian Federation. (2018). Russia and world counties, 2018: Statistical collection. Rosstat. Accessed October 3, 2021, from https://rosstat.gov.ru/storage/mediabank/ world18.pdf

I. V. Andronova et al. Federal State Statistics Service of the Russian Federation. (2019). Russia and the European Union member states, 2019: Statistical collection. Moscow, Russia: Rosstat. Accessed October 3, 2021, from https:// rosstat.gov.ru/storage/mediabank/Rus-Es2019.pdf Federal State Statistics Service of the Russian Federation. (2020). Russia and world counties, 2020: Statistical collection. Moscow, Russia: Rosstat. Accessed October 3, 2021, from https://rosstat.gov.ru/ storage/mediabank/VMMhKbGo/world2020.pdf Government of the Russian Federation. (2019). Methodology for calculating the indicator “Poverty rate” for the period up to 2024, including for the reporting period (current year) and for the planning period of two years following the reporting period (Annex No. 20 to the decree of the Government of the Russian Federation on July 17, 2019, No. 915). Moscow, Russia. Accessed October 3, 2021, from http://base.garant.ru/72330006/ 62ca3c9a93aac147338fa0b3dccb5683/#ixzz78GqzK1Tu Jenkins, S. (2020). Perspectives on poverty in Europe. Following in Tony Atkinson’s footsteps. Italian Economic Journal, 6, 129–155. https://doi.org/10.1007/s40797-019-00112-0 Malakhova, T. S. (2019). The transformation of the world economy in the context of global instability. In L. E. Grinin & A. V. Korotayev (Eds.), Kondratieff waves: The spectrum of opinions (pp. 213–217). ‘Uchitel’ Publishing House. Accessed October 3, 2021, from https:// www.socionauki.ru/upload/socionauki.ru/book/files/k_waves_4_ en/Malakhova.pdf Malakhova, T. S., Dubinina, M. A., Maksaev, A. A., & Fomin, R. V. (2019). Foreign trade and marketing processes in the context of sustainable development. International Journal of Economics and Business Administration, 7(S2), 195–202. https://doi.org/10.35808/ ijeba/384 Malakhova, T. S., & Kolesnikov, N. P. (2019). Trends and contradictions of the global economy crisis and transformation of the world financial institutions. European Journal of Economics and Management Sciences, 1, 38–41. The European Foundation for the Improvement of Living and Working Conditions (Eurofound). (2020). Programming document 2021–2024 Towards recovery and resilience. Accessed October 3, 2021, from https://www.eurofound.europa.eu/publications/workprogramme/2020/programming-document-2021-2024-towardsrecovery-and-resilience

Development of the Institute of Customs Representatives in the Republic of Kazakhstan Mikail B. Khudzhatov , Valentin Yu. Vakhrushev Khalilova , and Shakizada U. Niyazbekova

, Milyausha K.

Abstract

JEL Codes

An important area of activity of the Eurasian Economic Union (EAEU) is the functioning of the Customs Union, which ensures free trade between the EAEU countries. Simultaneously, the EAEU countries are trying to adhere to a common customs policy in trade with third countries. In this context, an important place is occupied by the customs infrastructure aimed at simplifying customs formalities within the framework of trade between the EAEU countries with non-EAEU countries. The paper shows the relevant problems in the functioning of the institute of customs representatives in the Republic of Kazakhstan. The presence of these problems necessitated the development of recommendations for their solution.

F15 · G22 · G24 · J51 · H29 · K29 · O24

1

Introduction

V. Y. Vakhrushev National University of Science and Technology (NUST MISIS), Moscow, Russia

The EAEU member countries are authorized to regulate certain issues of the functioning of the institution of customs representatives at the level of national customs legislation (Krasova & Ostanina, 2021). In recent years, there have been some trends toward the successful development of the customs services market in Kazakhstan (Smolina & Seryomina, 2019). However, the institution of customs representatives in Kazakhstan faces several problems that are serious obstacles to the effective functioning of the customs infrastructure. The need to identify these problems and find ways to solve them caused the relevance of this research (Republic of Kazakhstan, 2022). The company can obtain the status of a customs representative when passing the procedures and fulfilling the conditions according to Table 1. A commercial organization can obtain the status of a customs representative only after the issuance of a certificate of its inclusion in the register of customs representatives. However, the company may lose the status of a customs representative for the reasons listed in Table 1. Data analysis (Table 1) indicates that, from the point of view of legal regulation, obtaining the status of a customs representative by a company does not look like a complicated procedure.

M. K. Khalilova Financial University under the Government of the Russian Federation, Moscow, Russia

2

Keywords

Eurasian Economic Union · Customs representative · International trade · Customs regulation · Digitalization of foreign economic activity

M. B. Khudzhatov (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]

S. U. Niyazbekova Financial University under the Government of the Russian Federation, Moscow, Russia Moscow Witte University, Moscow, Russia

Materials and Methods

Let us consider the algorithm for including a commercial company in the register of customs representatives in Kazakhstan (Fig. 1).

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_44

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Table 1 Conditions for assigning the status of a customs representative to a company and grounds for excluding a commercial organization from the register of customs representatives Conditions for assigning the status of a customs representative to a company 1) Insurance of the risk of civil liability of a company that claims to obtain the status of a customs representative to third parties (in Kazakhstan, the insurance amount, in this case, is arbitrary); 2) Ensuring the fulfillment of the duties of a company wishing to obtain the status of a customs broker, in the amount of 500,000 euros (in the context of customs payments) or 150,000 euros for exporting goods not subject to export duties; 3) Absence of arrears in the payment of customs duties; 4) Availability of a valid agreement on the use of an electronic invoice information system by a company wishing to obtain the status of a customs broker; 5) The absence of an outstanding criminal record of the CEO.

Grounds for excluding a commercial organization from the register of customs representatives 1) Ignoring by the customs representative of the duties assigned to it by the provisions of customs legislation; 2) Submission by a company with the status of a customs representative of an electronic application for its withdrawal from the register; 3) Liquidation or reorganization of a company with the status of a customs broker; 4) Non-resumption of the work of the customs representative after its suspension, as well as non-removal of the reasons for such suspension; 5) Bringing a company with the status of a customs broker within one year more than two times to administrative responsibility.

Source: Compiled by the authors based on the Customs Code of the Eurasian Economic Union (2017) and Customs Code of the Republic of Kazakhstan (2022)

Primarily, it is necessary to issue two insurance contracts with an insurance company: 1. As a security for the payment of customs duties, the first insurance contract is drawn up in the amount of 500,000 euros in any currency equivalent. It should be noted that the Customs Code of the EAEU and the Customs Code of the Republic of Kazakhstan offer companies a choice of several ways to ensure the payment of customs duties, namely: cash collateral, bank guarantee, property pledge, surety, and insurance, a fragment of which is presented in Table 2 (Eurasian Economic Union, 2017; Ministry of

Fig. 1 Algorithm of inclusion of a commercial company in the register of customs representatives in the Republic of Kazakhstan. Source: Developed and compiled by the authors

Finance of the Republic of Kazakhstan, 2018; Republic of Kazakhstan, 2022); 2. Insurance of civil liability of a commercial company to its customers for an arbitrary amount (Khursanov, 2021). In Kazakhstan practice, an insurance amount of at least one million tenges is recommended. Both insurance contracts must be executed in an insurance company included in the register of insurance organizations in the Republic of Kazakhstan, a fragment of which is presented in Table 2.

1. To issue two insurance contracts in an insurance company 1) as collateral in the amount of 500 thousand euros

2) insurance of GPO in the amount of 1 million tenge

2. Registration as security for the first insurance contract in the amount of 500 thousand euros

3. Preparation of a package of documents, filling out an application for inclusion in the register

4. The package of documents is sent in electronic form through the portal egov.kz, with the sending of originals in paper form to the central office of the SRC of the Ministry of Finance of the Republic of Kazakhstan

5. Verification of documents, making a decision on the inclusion of the company in the register of customs representatives

Development of the Institute of Customs Representatives in the Republic of Kazakhstan

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Table 2 Insurance organizations in the Republic of Kazakhstan Name 1. JSC “IC ‘Basel’” 2. JSC “IC ‘Amanat’” 3. JSC “IC ‘ASKO’” 4. JSC “IC ‘Victoria’” 5. “Kazakh Export Insurance Company” JSC 6. JSC “SC ‘Eurasia’” 7. JSC “Jýsan Garant” 8. JSC “DO NBK ‘IC ‘Halyk”” 9. JSC “KSZh ‘State Annuity Company’” 10. JSC “Kazakhmys IC” 11. JSC “IC ‘Kommesk-Omir’” 12. JSC “SC ‘London-Almaty’” 13. JSC “Oil Insurance Company” 14. JSC “IC ‘NOMAD insurance’” 15. JSC “IC ‘Sentras insurance’”

Address 244A N. Nazarbayeva ave., Almaty 232 Dostyk ave., Almaty 15 Bukhar-Zhyrau ave., Karaganda 521 Seifullina ave., office 109, 114, and 115, Almaty 55A Mangilik el ave., Yesil district, Nur-Sultan 59 Zheltoksan str., Almaty 60 Auezova str., Almaty 109 V Abaya ave., n.p. 9a, Almaty 11 Imanova str., Nur-Sultan 31 Gogol str., Kazybek bi district, Karaganda 19 Nauryzbai Batyr str., Almaty 19/1 Al-Farabi ave., Almaty 15A Almagul md., Almaty 110 Dzhumalieva str., Almaty 151 Mynbayeva str., Almaty

License No. 2.1.75 from 28.12.2020 No. 2.1.70 from 19.02.2020 No. 2.1.66 from 27.09.2019 No. 2.1.56 from 13.02.2019 No. 2.1.55 from 21.05.2018 No. 2.1.6 from 25.02.2019 No. 2.1.76 from 12.08.2021 No. 2.1.71 from 18.02.2020 No. 2.2.39 from 25.11.2010 No. 2.1.61 from 16.01.2019 No. 2.1.63 from 22.01.2019 No. 2.1.67 from 15.03.2019 No. 2.1.10 from 12.02.2019 No. 2.1.38 from 13.02.2019 No. 2.1.65 from 06.02.2019

Source: Compiled by the authors based on Insurance sector (The Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market, n.d.)

At the second stage, registration is required as security for the payment of customs duties of the first insurance contract in the amount of 500,000 euros in any currency equivalent. In case of successful registration of the insurance contract as a way to ensure payment of customs duties, a legal entity receives a security card, then it is necessary to inform the State Revenue Committee (SRC) of the Ministry of Finance of the Republic of Kazakhstan in electronic form about receiving a security card (Republic of Kazakhstan, 2022; State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan, n.d.). At the third stage, it is necessary to prepare a package of documents and fill out an application to obtain the status of a customs representative. A list of documents submitted to obtain the status of a customs representative in the Republic of Kazakhstan (Ministry of Finance of the Republic of Kazakhstan, 2020; Republic of Kazakhstan, 2022) includes the following: 1. The application is submitted electronically by the company wishing to obtain the status of a customs representative to the authorized customs body; information on the registration of the enforcement of the commercial company’s obligations (security card); 2. The contract of insurance of civil liability is concluded in electronic form through the information system of the insurance company; 3. The identity document of the head of the company (e.g., the passport of the director of a commercial company wishing to obtain the status of a customs representative); 4. Consent to the use of commercial and other legally protected secrets contained in the information systems of public authorities.

At the fourth stage, the package of documents is sent in electronic form using an electronic digital signature (EDS) through the portal egov.kz with a lot of originals in paper form. The package of documents for obtaining the status of a customs representative must be sent to the Chairman of the SRC (Electronic Government of the Republic of Kazakhstan, n.d.). It is important to note that when submitting documents in electronic form through the portal eokno.gov.kz it is also necessary to specify information about the arrears in the payment of customs duties. The BIN check should show that the applicant has no debts (Single Window of the Republic of Kazakhstan for Export-Import Operations, n.d.). This information is confirmed by providing the following: • A certificate of absence of debt issued by the state revenue authorities; • Information about the existence of an agreement on using an electronic invoice system (EIS). Under this agreement, the organization undertakes to use the EIS, through which the statement, sending, receiving, registration, processing, transfer, receipt, and storage of EIS are carried out; • Information about the absence of an outstanding criminal record from the director of a commercial company wishing to obtain the status of a customs representative. This information is confirmed by providing a certificate of non-conviction of the director. The SRC notifies the company electronically of obtaining the status of a customs representative no later than one working day from the date of registration of the above decision. After that, it is necessary to notify the State Revenue Department at

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portal eokno.gov.kz, a portal for customs declaration of goods ASTANA–1 is used (National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken”, 2018).

the place of tax registration (Kazakhstan Association of Customs Brokers, 2022).

3

Results

1. The procedure for including a commercial company in the register of customs representatives is quite convenient; many operations are carried out in electronic format through the portals egov.kz and eokno.gov.kz. 2. The main way to ensure the payment of customs duties by a commercial company wishing to obtain the status of a customs representative is the conclusion of an insurance contract (Medin, 2021). 3. Customs legislation does not establish a specific amount of insurance for the civil liability of a commercial company to its customers; the insurance amount is determined arbitrarily. In other EAEU countries, these conditions do not apply (Keiser & Tortora, 2022). Simultaneously, the institution of customs representatives in Kazakhstan faces several problems that seriously hinder its development. The analysis of the theory and practice of functioning of the institute of customs representatives in Kazakhstan allows us to identify the following problems: 1. Restriction of ways to ensure payment of customs duties by a commercial company wishing to obtain the status of a customs representative in one way—an insurance contract. 2. Lack of real competition among insurance companies that can conclude an insurance contract with a commercial company wishing to obtain the status of a customs representative (Nazarko, 2022). 3. The insurance company JSC “Jýsan Garant” is practically a monopolist in this area, which allows it to dictate its terms when concluding an insurance contract. 4. The impossibility of registering the security for the payment of customs duties and obtaining a security card in electronic form through the portals egov.kz and eokno. gov.kz. In this case, a commercial company wishing to obtain the status of a customs representative is forced to submit an electronic appeal of a generally established form, the consideration period of which takes three weeks, while registration of collateral by law must be carried out within three working days. 5. The need to use several state electronic portals for a commercial company to carry out activities as a customs representative. In addition to the main portal egov.kz and

The impossibility of submitting an application to obtain the status of customs representative and submit the necessary documents in electronic form through the portals egov.kz and eokno.gov.kz. A commercial company wishing to obtain the status of a customs representative is forced to submit an electronic appeal of a generally established form with the attachment of documents, the consideration period of which takes about one month, while the decision to include a commercial company in the register of customs representatives by law must be made within 10 working days (Ministry of Finance of the Republic of Kazakhstan, 2018; Republic of Kazakhstan, 2022).

4

Conclusion

The following measures are proposed to solve the above problems: 1. Expansion of ways to ensure the payment of customs duties by a commercial company wishing to obtain the status of a customs representative by implementing in practice such a method as a bank guarantee. 2. In this context, it is advisable to accept bank guarantees issued by the most reliable banks of the Republic of Kazakhstan as security by Kazakhstan’s customs authorities (Nurtayeva et al., 2022). 3. Introduction of the mandatory nature of the conclusion by Kazakhstan’s insurance companies of an insurance contract with a commercial company wishing to obtain the status of a customs representative. This commitment will stimulate the market for insurance services in the field of customs. 4. The introduction of a minimum threshold of 10 million tenges in insurance contracts of the second type will ensure the selection of more stable companies as customs representatives in the customs services market (Sembekov, 2020). 5. Digitalization of registration procedures for ensuring payment of customs duties and obtaining the status of a customs representative by implementing the possibility of their implementation in electronic form on the portal eokno.gov.kz without duplication on paper (Karpukhina, 2019; Pavlova & Smolina, 2021; Sladkova, 2021).

Development of the Institute of Customs Representatives in the Republic of Kazakhstan

6. Combining the functionality of several electronic portals for a commercial company to conduct its activities as a customs representative. In particular, all functions of the customs representative should be implemented on the portal eokno.gov.kz. This measure will simplify the customs representative’s performance of customs formalities, which will help accelerate the turnover of goods in international trade (Torello, 2021). Acknowledgments This paper has been supported by the RUDN University Strategic Academic Leadership Program.

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The Impact and Role of Foreign Direct Investment in the Modernization of China’s Automotive Industry Natalia A. Volgina

and Yuanlong Wang

Abstract

The Chinese automobile industry started late, and its overall development is slow. The main reason is restricted by the imperfection of China’s manufacturing industry. It was not until after World War II that China began to build and gradually improve its manufacturing industry. Therefore, if China wants to develop its own automobile industry, it is not enough to rely on itself. The cycle is too long. Attracting international automobile manufacturers to invest in China is an inevitable result. However, China’s special political system and the importance of the automobile industry also make it impossible for international automobile manufacturers to occupy a dominant position in China’s investment. Nevertheless, it will dominate in terms of technology and brand. Keywords

Direct investments · Modernization of the automotive industry · Production and sales volume · Joint venture

JEL Codes

C19 · C22 · D11 · D21 · D45 · E22 · E27 · F15 · F17 · F21 · F23

1

Introduction

Modernization of the automotive industry can be called a typical capital-intensive industry. From the point of view of the automotive industry chain, all aspects of research and development, production, procurement, and sales have capital-intensive characteristics. N. A. Volgina (✉) · Y. Wang Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

Since the 1990s, the automotive industry in developed countries has been facing cost pressures in all aspects of the production chain. For example, in the production process, stabilization or even reduction of wage costs is also an important part of reducing production costs. Although wage costs account for only 7% to 10% of the cost of cars, wage growth rates in the automotive industry in developed countries tend to be higher than labor productivity. Therefore, foreign manufacturers always seek to restrain direct or indirect wage increases to avoid cost inflation. In turn, wage reductions are held back by trade unions and other organizations. To this end, most companies have adopted the method of transferring production processes abroad, accelerating the international transfer of the automotive industry. Since the automotive industry is currently one of the most efficiently developing sectors of the Chinese economy with a multimillion-dollar annual production volume in absolute terms, it must be understood that even in the middle of the twentieth century, the production of cars was only a few thousand copies per year.

2

Methodology

As the pillar industry of a country, the automobile industry plays an important role in a country. However, with the development of the global economy in recent years, the production cost of the automobile industry has gradually increased. From a macroeconomic perspective, the automotive industry has been subject to many constraints, such as logistics, tariffs, policies, and manpower. At the same time, with the development of science and technology, a large number of enterprises have entered the field of automobile production, which has increased competition in the automobile industry year by year. This has forced international automobile manufacturers to place some links in the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_45

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industrial chain in developing countries to reduce production costs and improve market competitiveness. Since the proclamation of the People’s Republic of China (October 1, 1949), the government has set a priority task, which was to form its own automotive industry in China. The following key factors have determined the intensive development of the automotive industry in China: • State support of manufacturing companies, which is aimed at increasing subsidies for the renewal of production technologies, the formation of a developed service network and distribution network, the development of models powered by alternative energy sources, the formation of the prestige of national cars, etc.; • Relevance of production technologies (small volume of engines, aesthetics of manufactured cars, etc.); • The fullest possible use of foreign experience, attention to brand development and management of its value, taking advantage of the internationalization of production (Alexandrov, 2014a). However, the development of China’s automotive industry cannot be called linear. Considering the history of the automotive industry in this country, it is customary to distinguish four stages: 1. From the mid-1950s (Preparatory) to the end of the 1950s: the absence of the automotive industry, the presence of workshops for the repair and maintenance of Western cars; the beginning of the process of creating a “people’s car” with the assistance of engineers and designers of the USSR; construction of the first automobile plant in Changchun in the northeast of China. 2. From the early 1960s to the early 1990s (active production): the growth of production capacities; the specialization of automotive production centers; the emphasis is made on the production of commercial vehicles, mainly trucks, used for military needs and in various sectors of the economy; gradual unification of automakers and creation of united companies. 3. From the early 1990s to the early 2000s (attracting foreign capital): redistribution of the dominance of individual producers; the growing trend of exporting products to other regions. 4. From the beginning of the 2000s to the present (increasing automotive capacity): the creation of technological innovations, increased sales market; significant progress in assembly quality. At the beginning of the twentieth century, China received a very small number of cars (about several thousand per year) produced in the UK, Japan, France, and, mainly, the USA. Until the 1930s, a car in the country was a rarity.

N. A. Volgina and Y. Wang

The first stage of the development of the Chinese automotive industry is characterized by the creation of similar production clusters in other cities, for example, in Beijing. Thus, the production of the first cars by the capital plant began already in 1958. Subsequently, the number of factories increased to ten (Yang, 2014). In the following years, there was an accumulation of experience in the automotive industry. Manufacturing plants appeared in Shanghai, Chongqing, and Guangzhou. Their specialization started to manifest itself. Thus, in Shanghai, the production of cars that are used as “taxis” in many cities of China was unfolding. The second phase of modernization of the automotive industry in the PRC is characterized by the desire to manage the domestic market with its own production forces. However, the low level of staffing in this industry and the apparent lag in the pace of car production affected the rate of motorization of the population, which remained extremely low. As of 1974, it was only 0.8 cars per 1000 people, which is much lower than in other Asian countries, including India (Alexandrov, 2014b).

3

Results

In the early 1980s, a new trend in the structure of China’s automotive industry became noticeable. It consisted of the gradual integration of manufacturers. The combined companies were formed at the expense of manufacturing plants, suppliers of component parts, and defense enterprises. In this way, by the beginning of the 1990s, the system of the “Big Three,” “Small Three,” and “Mini-Two” was formed (Table 1). The key goal of this system was to specialize in production by attracting multinational automobile corporations to the country. Moreover, it should be noted that the interest, in this case, was mutual. The lack of a proper level of staffing and low growth rates of production capacities encouraged Chinese manufacturers to cooperate with global automakers (Barabolina, 2008). Thus, the formation of the system of the “Big Three,” “Small Three,” and “Mini-Two” contributed to the increase in production capacity and scientific and technical potential of the country. Additionally, the number of cars produced has increased significantly. Since the beginning of the 1990s, the state policy towards the automotive industry has been fundamentally changing. Attracting foreign capital to the manufacturing industry became a new course. Simultaneously, investors from Western Europe and the USA were also interested in the prospects that might open up for them within the framework of the PRC market.

The Impact and Role of Foreign Direct Investment in the Modernization of China’## Table 1 Structure of the automobile industry of China in the 1980s and 1990s

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Company name The “Big Three” FAW VW Dongfeng Peugeot-Citroën Shanghai VW The “Small Three” AMC Beijing Jeep Guangzhou Peugeot Daihatsu Tianjin The “Mini-Two” Changan Suzuki Guizhou Aircraft Industry

Date of foundation November 1990 April 1992 February 1985 May 1983 September 1985 April 1984 May 1993 June 1964

Source: Compiled by the author

Many Western companies have attempted to create a joint venture with Shanghai Automotive Industry Corporation. Nevertheless, only General Motors, which invested more than $1 billion in a joint business with the Chinese side, managed to realize its plans. Further, the Japanese automotive industry leader, Honda, launched joint activities with Guangzhou Automotive Manufacturing. By the end of the 1990s, Ford also entered the Chinese market, establishing joint activities with Changan (Yang, 2014). In 2001, when China joined the WTO, a new stage of modernization of the country’s automotive industry began. National automakers managed to gain a foothold in the domestic market even more. Additionally, the volume of exports of inexpensive models of economy class cars began to grow faster (Xiangzhong, 2010). The flow of FDI to China continues to increase. Having opened the capital market, the automotive industry began to receive private and public funds; the process of borrowing foreign technologies began (Gamazin, 2007). It is important to note that the modernization of the automotive industry is one of the main industries of the country. It is also part of the manufacturing industry. The manufacturing industry is linked to national defense and security, as well as the country’s economic stability. Therefore, while the inflow of foreign capital into China is increasing, external sources of financing for the automotive industry continue to account for a much smaller share of total investment in the industry. This relative figure has been declining in recent years. Table 2 presents the relevant data and the annual growth of FDI. The uneven growth of FDI inflows into the automotive industry can be explained by the following factors:

• Decisions of specific investors; • The emergence of additional funds for investing in new projects; • The emergence of the need for additional capitalization of existing assets (Li et al., 2007). Thus, in 2008, the share of FDI in financing the Chinese automotive industry was 22%. By 2016, this share had decreased to only 15%. Against the background of the COVID-19 pandemic, which has engulfed the whole world in recent years, there is also no need to state an increase in the share of external investments. However, despite the insignificant scale of attracting foreign investment compared to the volume of domestic financing, the total investments of large foreign auto corporations in the industry of the People’s Republic of China in 2004 exceeded $20 billion. Infusions of international automobile concerns (monetary and technological) allowed the PRC to significantly improve the quality of manufactured cars and their components and significantly increase output volume (Alexandrov, 2014a). Additionally, the increase in foreign direct investment in China’s automotive industry has led to a significant increase in labor productivity and the market infrastructure of China’s automotive industry, for example, to the rapid development of the auto parts industry. Moreover, it should be noted that the global financial and economic crisis of 2008 did not prevent but contributed to the assignment of the status of a world leader in terms of annual car production to China in the same year. The share of the Chinese industry accounted for about 14% of the total

Table 2 Share of FDI in the main capital of the automotive industry of China in 2008–2020, % Indicator Share of FDI Share of domestic investments Growth of FDI in fixed assets

2008 22% 78% 8.3%

2010 14.5% 85.5% 5.8%

2012 17.8% 82.2% 21.1%

Source: Compiled by the authors based on China Statistical Yearbook (2020)

2014 15.5% 84.5% -6.7%

2016 15% 85% 16.8%

2018 16.3% 83.7% 11.2%

2020 14.9% 85.1% 5.9%

260 Fig. 1 Dynamics of the increase in China’s share in global car production in 2008–2020. Source: Compiled by the authors based on the China Association of Automobile Manufacturers (CAAM) (2021)

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number of cars produced in the world. In the following years, the share of the PRC only increased (the growth dynamics are shown in Fig. 1). Joint ventures preferred to acquire licenses, and large initial investments by foreign partners made it possible to organize production quickly. It is not uncommon to find an opinion that the incentive for large-scale financing of Chinese enterprises by Western automakers was the availability of relatively cheap labor and the desire to overcome tariff barriers. However, in reality, the flow of foreign investment was largely due to the significant potential of the domestic automotive market in the long term (Yu, 2011). Since the inflow of foreign capital was tightly controlled by the central government and provincial authorities, Western automobile companies were limited in many aspects of their activities, for example: • • • •

In the formation of pricing policy; In the amount of investments; In the nature and scale of production; In the volume of internal sales, etc.

In accordance with Chinese law, the share of a foreign partner in a joint venture could not exceed 50%. The only exception was the production of spare parts and components. In this case, full participation in the company’s capital was allowed. In all cases, the central government of the People’s Republic of China controlled and greatly influenced the development and growth of enterprises in the automotive industry. Wanting to attract the latest technological achievements of the Western world to the country, the Chinese authorities successfully used competitive advantages of their country. The state was ready to provide financing to joint ventures to import new production technologies. The regional regulation levers, credit, tax, and customs policy instruments were used, setting high (up to 200%) customs duties on car imports to support Chinese automakers.

By the beginning of the 2000s, almost all world leaders of the automotive market were represented in the Chinese market, having created joint ventures with Chinese manufacturers on terms that continued to be rigidly dictated by the state institutions of the PRC. To a greater extent, such a policy was carried out not so much to attract foreign financing to the sector as to obtain Western technologies, which foreign partners had to share with the Chinese side as part of a joint venture. The low level of production costs at automobile enterprises in China provides favorable prospects for exporting cars to conquer new markets. Thus, in 2002, the Chinese Dongfeng and the Japanese Honda Corporation created a joint venture that allowed the Chinese manufacturer, through a large-scale dealer network, to easily penetrate the markets of the Asian region, which had previously been virtually monopolized by multinational corporations of Japan. On this basis, the central government of the People’s Republic of China even granted permission to Honda Corporation to control 65% of the shares of the new enterprise. Currently, there are more than 120 enterprises in China that are engaged in the production of cars. Only ten of them (i.e., less than 10%) are large; the rest are small production, numbering up to 10 thousand cars per year. Such enterprises compete fiercely with each other for the sales market. Finally, since January 1, 2022, the state authorities of the People’s Republic of China have lifted restrictions on investments by foreign manufacturers in the national automotive industry. Since Chinese automakers have gained access to Western technologies and by now have sufficiently mastered the advanced developments of global companies, since 2018, the government has begun to introduce easing gradually. According to statistics from the Association of Automobile Manufacturers of the People’s Republic of China, in recent years, sales of Chinese cars in physical terms have increased several times. Thus, in 2008, they amounted to

The Impact and Role of Foreign Direct Investment in the Modernization of China’## Fig. 2 The place of exports in total car sales in China in 2008–2020. Source: Compiled by the author based on the China Association of Automobile Manufacturers (CAAM) (2021)

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about 10 million units of vehicles. In 2020, this figure exceeded 25 million units. In 2017–2018, the number of cars sold reached 28 million units (see the diagram in Fig. 2). During the same period, the volume of car exports in physical terms increased by about two times (in 2008, China managed to sell about 600 thousand cars to other countries; in 2020, despite the COVID-19 pandemic, this number reached 1 million vehicles). In the structure of total sales, the export of Chinese cars remains at the level of 4%–5% on average. It is important to emphasize that the share of exports is decreasing in dynamics. For comparison, exports accounted for 6% of total car sales in 2008, decreasing to 4% by 2020. This indicates the orientation of the Chinese automotive industry to the domestic market, which, combined with the growth of car sales, indicates an increase in the solvency of the Chinese population and the growth of the country’s motorization in recent years. Nowadays, the growing differentiation of demand and the increasing intensity of competition in the industry is making new challenges for Chinese automakers, including the following: • Scaling of volumes and sales directions, considering regional specifics; • Optimization of costs to reduce prices while improving quality and technical characteristics; • Increasing output while maintaining a high degree of individualization. Even though the company’s size is of no small importance in the automotive industry, it still does not provide guarantees and a significant advantage over competitors. The new conditions of the global economy require new solutions, primarily in the field of improving the efficiency and competitiveness of production. Such solutions were the use of unified platforms and the creation of “global” models, as well as modular assembly and the development of flexible production, in which Japanese and European companies succeeded.

2012 2014 export internal market

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Largely due to this, they displaced American enterprises from the automotive market at one time. Automakers in China today follow a similar approach.

4

Conclusion

The assessment of the achievements of the Chinese automotive industry allows us to conclude that its success is primarily associated with the competent implementation of state policy. This policy of the central government of the People’s Republic of China and municipal authorities aimed to stimulate multinational companies within the framework of administrative and economic regulation measures to invest in joint ventures formed with national automakers. The policy allowed achieving the main goal—obtaining Western technologies and manufacturing innovations in the automotive industry. The achievement of the enormous growth in car production in China is due, among other things, to the capacious and fast-growing domestic market and relatively inexpensive production resources that could not be ignored by the world’s largest automakers seeking additional profits. As the Chinese government gradually liberalizes its foreign investment policy, it will also attract the attention of more international automakers. At the latest stage of its development, the automotive industry of China is characterized by the permanent growth of the domestic market due to the growth of population and per capita income and an increasing degree of internationalization, which is realized in the form of exports, M&A transactions, investment cooperation, and scientific and technical cooperation between Chinese manufacturers and leading automotive corporations of the world. However, while developing the international market, Chinese manufacturers also need to develop the potential of the Chinese consumer market constantly. If they lose their share of the Chinese market because they paid too much attention to the international market, it will become a very big crisis for Chinese manufacturers.

262 Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project № 060121-0-000.

References Alexandrov, I. A. (2014a). Dynamics and structure of development of the automotive industry of the People’s Republic of China at the present stage. Vestnik Universiteta, 6, 9–12. Alexandrov, I. A. (2014b). The experience of the development of the automotive industry in the People’s Republic of China and the possibility of its use in The Russian Federation (Abstract Dissertations of Candidate of Economic Sciences). State University of Management. Accessed March 24, 2022, from https://guu.ru/files/ referate/2014/aleksandrov_i_avt.pdf. Barabolina, A. I. (2008). World car manufacturers on the Chinese market in the initial period of reforms 1978–1993. Problems of Modern Economy, 3(27), 529–534. Accessed March 24, 2022, from http://www.m-economy.ru/art.php?nArtId=2182

N. A. Volgina and Y. Wang China Association of Automobile Manufacturers (CAAM). (2021). China automobile exports (2008–2021). Accessed March 24, 2022, from http://en.caam.org.cn/Index/show/catid/40/id/1719.html Gamazin, I. V. (2007). Management of a network of automobile dealer enterprises. (Abstract of Dissertations of Candidate of Economic Sciences). State University of Management. Li, M., Gerasimov, B. I., & Shi, X. J. (2007). Improving the quality of automotive industry products. Publishing House of the Tambov State Technical University. Accessed March 24, 2022, from https:// tstu.ru/book/elib/pdf/2007/k_Li-min.pdf National Bureau of Statistics of China. (2020). China statistical yearbook, 2020. China Statistics Press. Accessed March 24, 2022, from http://www.stats.gov.cn/tjsj/ndsj/2020/indexeh.htm Xiangzhong, L. (2010). Trends and prospects for the development of the passenger car industry in China (Abstract of Dissertations of Candidate of Economic Sciences). Peoples’ Friendship University of Russia. Accessed March 24, 2022, from https://new-disser.ru/_ avtoreferats/01004801887.pdf. Yang, Y. (2014). The development of the automotive industry in China. Transport Business of Russia, 2, 69–71. Yu, Y. (2011). Status and outlook of trucking industry People’s Republic. Transport Business of Russia, 9, 193–194.

Economic Cooperation of the Levant Countries: Main Directions and Opportunities Lyudmila V. Shkvarya Diaz

, Vasily I. Rusakovich

, and Malik A. Abou Zahr

Abstract

JEL Codes

The relevance of this research lies in the fact that new trends of decentralization and regionalization are intensifying in today’s world economy. These trends require additional scientific research. The paper aims to analyze the socio-economic processes and international cooperation of countries in the Levant region. The authors found that the Levant region, which includes Turkey, Egypt, Iraq, and Lebanon, sees an increase in economic interaction, the role of which increases for national economies and the region of the Middle East and North Africa. The research shows that there are certain objective prerequisites for developing Levantine cooperation at the country, regional, and global levels. Economic cooperation within the Levant can be seen as one of the contemporary mechanisms for ensuring more sustainable development of the participating countries and the region as a whole. The research novelty lies in identifying the features of international economic cooperation in the Levant, its directions, and possible effects. The authors found that the Levant countries will intensify their trade and economic cooperation. It covers not only mutual trade but also the implementation of joint projects of long-term and strategic importance for these countries. The information for this research is based on UNCTAD statistics and previous studies on the subject.

F02 · F12 · F15 · F43 · F63

Keywords

Middle East · North Africa · Levant · Economic development · The international cooperation

L. V. Shkvarya (✉) · V. I. Rusakovich Plekhanov Russian University of Economics, Moscow, Russia M. A. Abou Zahr Diaz Peoples’ Friendship University of Russia, Moscow, Russia

1

Introduction

Many researchers state that the instability of the world economy currently persists and even increases (Krylov & Fedorchenko, 2015). This is manifested in a decline in the production of world GDP, world exports, and FDI, recorded by international organizations such as the IMF, WTO, and UNCTAD. Supply chains are also disrupted, and difficulties arise in the field of international payments. These and other processes destabilize the socio-economic development of many countries with emerging markets. These countries often remain dependent on the export of resources to the world market. Resource markets, especially oil and gas, have experienced particularly acute volatility in recent years (Solovieva et al., 2021). The events of 2022 allowed predicting the persistence of problems in the global economy and difficulties in the global markets for goods and services (finance, tourism). Naturally, the formed and emerging difficulties require countries and entire regions to adopt new advanced solutions. Countries are developing new mechanisms for regional cooperation. Integration processes are activated, for example, in the Gulf Cooperation Council (GCC) (Savinsky, 2021). Non-institutional mechanisms with no rigid frameworks and obligations are emerging in the world. According to researchers, an example of such a mechanism is the China Belt and Road Initiative (Kolosov et al., 2017). Since the region of the Middle East and North Africa has been experiencing a particularly acute period of instability for at least the past ten years (Melanjina, 2020), countries are trying to strengthen constructive trends at the regional level. In particular, the idea of economic cooperation between countries that historically united in the region, which was called the Levant, is being revived. Geographically, this is the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_46

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region of the Eastern Mediterranean. In our opinion, the revival of cooperation in the Levant may have an economic effect on the project participants. It is important to understand its mechanisms and the direction of its activities. However, scientists still pay insufficient attention to their research.

2

Methodology

The research analyzes the macroeconomic indicators of the six main countries of the Levant, such as Turkey, Syria, Lebanon, Jordan, Iraq, and Egypt, from 2000 to 2020. The state of mutual trade of these countries and the presence of joint—bilateral and multilateral—projects in other segments of the economy are studied. The high importance of joint economic cooperation for these countries, as well as its possibility in the context of growing global instability, is substantiated. After the research, the authors formulate the main conclusions. As part of the research, the authors relied on traditional methods of economic analysis, comparative, historical approaches, and the visualization method.

3

Results

Turkey, Syria, Lebanon, Jordan, Iraq, and Egypt are compactly located in the region of the Middle East and North Africa. These countries have historically formed a certain commonality in the field of culture, traditions, customs, social sphere, economy, interaction, and even cuisine. It is believed that these countries speak the same dialect—“Levantine-Arabic” (except for Turkey). General distinguishing features associated with the conduct of economic activities—its types, methods, features, and rules on how to conduct and finance it (e.g., through the 1200000 1000000

principles of Islamic finance), cooperation, as well as some objective (natural) parameters (geographical, climatic, etc.),—also led to a certain economic complementarity and mutual attraction of these countries (Chepkemoi, 2018; Egel et al., 2019). In turn, this predetermines their economic interaction, primarily in the sphere of trade, finance, and investment. This attraction experiences ups and downs; at different times, it is realized in different ways—it is activated, it fades, and sometimes even conflicts arise, including military ones. Scientists state that the desire for cooperation has increased in the twenty-first century. In addition to the named basic reasons, this desire is facilitated by the policy of Turkey, which seeks to strengthen its influence in the region, as well as by the objective desire of the countries of the Levant to stabilize socio-economic processes, increase competitiveness, and reduce risks. This is especially important given that only in 2017 did hostilities end in Syria and Iraq, which caused enormous damage to their economies and social sphere. The countries of the Levant are differentiated by the size of the economy (Fig. 1). They also differ in the direction of dynamics. Figure 1 shows that, although Turkey has become the largest economy in the Levant in the twenty-first century, it has been experiencing difficulties since 2014, while Egypt is successfully building up its economic potential. Syria, the smallest economy in the Levant, faces challenging tasks of restoring its economy, which was noticeably destroyed during the military conflict (Alnafrah & Mouselli, 2020). However, in any case, all countries are interested in stabilizing and forming, perhaps by joint efforts, some kind of “center of stability” in an extremely unstable region and an unstable world. We can consider this aspiration to be objective. The economies of the Levant countries, as well as other countries in the region, depend on foreign trade because they

Egypt Iraq Jordan

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Lebanon Syrian Arab Republic Turkey

400000 200000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fig. 1 Dynamics of the GDP of the Levant countries in 2000–2020, million dollars at current prices at the current exchange rate. Source: Compiled by the authors based on UNCTADSTAT (n.d.)

Economic Cooperation of the Levant Countries: Main Directions and Opportunities

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Fig. 2 Dynamics of exports of the Levant countries in 2000–2020, million dollars at current prices at the current exchange rate. Source: Compiled by the authors based on UNCTADSTAT (n.d.)

do not have sufficient resources and opportunities for “selfreliance.” Therefore, it is important to analyze its state (Fig. 2). Figure 2 shows that in 2021, all countries recorded an increase in exports, which means that foreign exchange earnings also increased. However, the very high volatility of export volumes over the past 15 years actualizes the task for the Levant countries to reduce dependence on world markets, the unpredictability of which has been colossal since 2008. This dependence “shakes” internal processes, negatively affects the social sphere and living standards, makes it challenging to finance long-term projects in various fields, and so on (Black & Gent, 2006).

Therefore, countries are striving to increase their cooperation not so much with the countries of the “center” as with regional partners. However, this cooperation is currently occurring in the Levant with varying degrees of success. For example, let us analyze the trade turnover of the Levant countries with Egypt (Table 1). According to Table 1, trade indicators fall or rise in different years and with different countries, depending mainly on global trends. For example, the fall in global GDP and international trade in 2020 due to the COVID-19 pandemic could not but affect the Levant. The tasks of restoring the post-conflict economies of Syria and Iraq have not been resolved, and their solution is difficult due to the effect of Western economic sanctions against these countries.

Table 1 Dynamics of trade turnover between the Levant countries and Egypt in 2016–2020, thousand dollars at current prices at the current exchange rate Turkey, exports to Egypt Turkey, imports from Egypt Trade turnover Syria, exports to Egypt Syria, imports from Egypt Trade turnover Iraq, exports to Egypt Iraq, imports from Egypt Trade turnover Jordan, exports to Egypt Jordan, imports from Egypt Trade turnover Lebanon exports Lebanon imports Trade turnover Total trade between Egypt and The levant

2016 2,518,406.00 1,354,666.00 3,873,072 108,012.00 169,569.00 277,581 213,640 382,141.00 595,781 77,710.00 472,993 77,710 66,728.00 736,237.00 802,965 5,627,109

Source: Compiled by the authors based on UNCTADSTAT (n.d.)

2017 2,293,811.00 1,845,003 2,293,811 109,716.00 226,867 109,716 669,029 492,775 1,161,804 107,468 463,005 570,473 77,539 591,503.00 591,503 4,727,307

2018 2,968,292 1,952,874 4,921,166 78,387.00 304,088 78,387 1,104,124 450,264 1,554,388 144,514 567,811 712,325 85,757.00 504,017.00 589,774 7,856,040

2019 3,678,426.00 1,713,781.00 5,392,207 96,591.00 263,733.00 360,324 143,213.00 386,655 529,868 172,051.00 790,871.00 962,922 118,117 388,862 506,979 7,752,300

2020 2,798,806.00 1,579,781.00 4,378,587 66,364.00 268,679.00 335,043 299,392 392,560 691,952 117,912.00 541,502 117,912 98,769 288,061 386,830 5,910,324

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These and other challenges have created extremely acute problems in the region, adversely affecting the socioeconomic processes developing in the region (Ayadi et al., 2015). However, over the past five years, despite the above and some other negative factors, the growth of Egypt’s trade with the Levant countries amounted to 5%, as confirmed by statistics. These dynamics, considering global trends and ongoing problems, can be assessed as a fairly good result. Therefore, in general, in our opinion, we can agree with those authors who believe that the potential for regional economic cooperation is very high. It may increase if the Levant countries manage to initiate the creation of a free trade zone and, in the future, eliminate tariff and non-tariff restrictions. In addition to trade, another important element of cooperation in the Levant may be tourism and travel because these are traditionally tourist countries (except Iraq). As is known, Egypt and Turkey receive a large number of tourists every year. According to these indicators, they are traditional leaders in the Levant. In the post-pandemic period, these countries, as well as Lebanon and Jordan (e.g., El Petra), could also increase the number of tourists through the implementation of joint projects in the field of inclusive tourism (Selim, 2020). In the past, Syria was also an attractive country for tourists with its unique historical monuments, such as Palmyra. Combining efforts in the field of tourism and travel, focused on third countries, could have a noticeable effect on the countries of the region in the post-COVID period, including employment growth directly in the tourism sector (hotel and restaurant industry) and in related activities—in trade in souvenirs and their production, improvement of the transport sector, entertainment industry, etc. For example, a number of researchers consider the development of the Russian-Levant tourist destination very promising (Selim et al., 2020). All this together will ensure the economy’s growth and improve its prospects. However, this requires, at a minimum, joint planning and development of a roadmap for the development of tourism in the Levant. Additionally, the absence of visa problems and geographical proximity also stimulate the development of tourism and travel between the Levant countries. Thus, the Egyptians intensified their visits to Lebanon with tourists; this trend continued even in 2019–2020 (Selim et al., 2020). Joint energy projects are being developed in the Levant. Thus, Egypt plans to build a gas pipeline that will unite the country with the territories of Lebanon and Syria, which will provide not only energy and economic incentives for development but also financial support. Other aspects of interaction in the Levant can also be named as directions for solving the common or similar tasks facing the countries. One of these tasks is the development of advanced technologies and their implementation in national economic systems. In this area, the countries of the

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Levant could use the experience of the GCC, which has already achieved notable success not in innovation and the digital sphere (Shkvarya & Frolova, 2017).

4

Conclusion

We have analyzed some areas of economic cooperation within the framework of the Levant countries. They have different directions and even significance for the region in terms of its speedy economic recovery. The research shows that the development of trade and projects between the Levant countries on a bilateral and multilateral basis is preserved, and its objective basis is strengthened. Our analysis allows us to assess this cooperation as very promising and one that can act as a catalyst for economic growth and somewhat stabilize the region in the context of the global recession. Simultaneously, our research allows us to say that, as of today, it does not seem appropriate to form a full-fledged integration association in the Levant due to a significant differentiation in the level of socio-economic development, the lack of a sufficient number of significant technologically completed production processes, and, in many respects, the conditional internal integrity of the Levant. A non-institutional form of economic interaction is more suitable for the Levant when countries and their economic entities participate in various projects or initiatives voluntarily and in the volumes that they consider possible and sufficient. This is important to avoid redistribution of economic gains in favor of more developed countries in the Levant, which is usually observed in institutionalized integration blocs. Such cooperation can have a structure-forming and stimulating effect. Moreover, it can ensure a broader and more selective involvement of non-regional partners in cooperation or the implementation of projects on their territory, considering the interests of the Levant and all interested parties.

References Alnafrah, I., & Mouselli, S. (2020). Constructing the reconstruction process: A smooth transition towards knowledge society and economy in post-conflict Syria. Journal of the Knowledge Economy, 11(1), 931–948. https://doi.org/10.1007/s13132-019-0582-0 Ayadi, R., Dabrowski, M., De Wulf, L., & (Eds.). (2015). Economic and social development of the Southern and Eastern Mediterranean countries. Springer. https://doi.org/10.1007/978-3-319-11122-3 Black, R., & Gent, S. (2006). Sustainable return in post-conflict contexts. International Migration, 44(3), 15–38. https://doi.org/10. 1111/j.1468-2435.2006.00370.x

Economic Cooperation of the Levant Countries: Main Directions and Opportunities Chepkemoi, J. (2018, July 24). Where is the Levant? WorldAtlas. Accessed April 20, 2022, from https://www.worldatlas.com/ articles/where-is-the-levant.html Egel, D., Parasiliti, A., Ries, C. P., & Walker, D. (2019). Estimating the economic benefits of Levent integration. RAND Corporation. https:// doi.org/10.7249/RR2375 Kolosov, V. A., Portyakov, V. Y., Suocheng, D., Chubarov, I. G., Tarkhov, S. A., & Shuper, V. A. (2017). The Chinese initiative “The Belt and the Road”: A geographical perspective. Geography, Environment, Sustainability, 10(10), 5–20. https://doi.org/10.24057/ 2071-9388-2017-10-1-5-20 Krylov, A. V., & Fedorchenko, A. V. (2015). The regional situation in the Middle East: Current state and prospects for development. Journal of International Analytics, 3, 56–83. https://doi.org/10.46272/ 2587-8476-2015-0-3-56-83 Melanjina, M. V. (2020). Digital society in the Arab countries and opportunities for its development in the context of global instability. In L. V. Shkvarya (Ed.), Socio-economic problems of the regions in the context of global instability (pp. 95–98). Inter-Regional Institute for Spatial Development. Savinsky, A. V. (2021). Integration processes among the members of the States of the Gulf Cooperation Council over the period 2010–2018. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic

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system: Evolutional development vs. revolutionary leap (pp. 1978–1986). Springer. https://doi.org/10.1007/978-3-03069415-9_217 Selim, M. (2020). Status and prospects for development of international tourism in the Arab Republic of Egypt. In: Proceedings of the ISCFEC 2020: International Scientific Conference “Far East Con” (pp. 2401–2406). Vladivostok, Russia. https://doi.org/10.2991/ aebmr.k.200312.333. Selim, M., Aidrous, I., & Semenova, E. (2020). International tourism: Prospects for development in the post coronavirus world (Egyptian example). International Journal of Management (IJM), 11(7), 1145–1155. Shkvarya, L. V., & Frolova, E. D. (2017). Transformations in socioeconomic development of the Gulf group states. Economy of Region, 13(2), 570–578. April 20, 2022, from. https://doi.org/10.17059/ 2017-2-21 Solovieva, Y. V., Chernyaev, M. V., & Vladimirovna, N. E. (2021). Brent and Urals oil price control mechanism. International Journal of Energy Economics and Policy, 11(3), 571–577. https://doi.org/10. 32479/ijeep.11022 UNCTADSTAT. (n.d.). Beyond 20/20 WDS – Table view. Accessed April 20, 2022, from https://unctadstat.unctad.org/wds/ TableViewer/tableView.aspx

EAEU and BRI: Current Prospects of Mutual Cooperation Irina N. Belova

, Elena A. Egorycheva

Abstract

The authors assess the current state, key risks, problems, and prospects of the processes of coupling the EAEU and the BRI. They also identify factors to improve the effectiveness of cooperation. The paper considers the possibility of integrating the EAEU and the BRI as the joint creation of a world order based on broad Eurasian integration. Based on the results of the study, based on the results of the SWOT-analysis, promising areas of practical implementation of the EAEU and BRI were identified. The authors conclude that financial, trade, and investment cooperation remain the area of potential for developing and coupling the EAEU and the BRI. Keywords

EAEU · BRI · China · Russia · Coupling · Integration

, and Filipp D. Belov

immediate reaction and government decision-making, especially from Russia and China. The world is going through a difficult period of changing technological and world economic patterns. Russia has close political and economic relations with China. They both have a great influence on Asian economies and implement the processes of mutual integration on the principles of mutual understanding, mutual benefit, equality, and openness (Glaziev et al., 2019). Coupling the EAEU and BRI is an example of multiregional connectivity: the BRI is global but is mostly promoted and supported by one country—China. This coupling serves the interests of both China and Russia. Other countries of the EAEU are also strengthening ties with China. EAEU countries seek China’s financing of infrastructure objects (Karmanov, 2020), creating industrial parks, and boosting trade agreements. The achieved positive results of multilateral cooperation are planned to be further deepened and expanded (Glaziev et al., 2019).

JEL Codes

F01 · F15 · O24 · Q43

1

Introduction

The processes of implementation and coupling of large-scale projects require constant analysis of external and internal factors determining their development, as well as an

I. N. Belova · E. A. Egorycheva (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected]; [email protected] F. D. Belov Russian Research Institute of Economics, Politics and Law in Science and Technology, Moscow, Russia e-mail: [email protected]

2

Methodology

This research aims to assess coupling the EAEU and the BRI and its further global development. The research defines the current state, key risks, problems, and prospects of cooperation between member countries. The comparative method, statistical, and system approach are applied to describe the research topic fully. Also, during the study, the SWOT analysis method was used.

3

Results

For Russia, integrating the EAEU and BRI is prerequisite for creating the Eurasian Economic Partnership, a larger and more ambitious project. The partnership is open to new members, and India, Pakistan, Iran, and other interested

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_47

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countries may join it in the future. According to the statement of the Russian President, by 2025, within the framework of this association, a single market for energy and hydrocarbons and a financial market will be created (Litvinova, 2020). Therefore, Russia and China seek to promote economic integration in Eurasia, not to aggravate competition between countries but to understand the need to combine integration processes and initiatives. The Department of Macroeconomic Policy presented an analytical report “Integration of the development strategy of the Eurasian Economic Union and the Chinese ‘Belt and Road Initiative’” (Panteleev et al., 2021). Among the practical results of the assessment of the coupling potential, the report identifies three categories of goods that are promising for exports of the EAEU to China: 1. The potential for trade exists for those products that the EAEU countries actively export to third countries but do not supply to China and that China actively buys but not from the EAEU countries. They are, for example, products of the automotive industry (some types of passenger cars, bicycles, and parts for them), pharmaceutical and medical products (some medicines, lenses, and orthopedic devices), dishwashers, some textiles, iron products, chemical products, some types of meat, and fabrics made of natural and synthetic materials. 2. Prospects for trade can be identified for goods whose supplies from the EAEU to the PRC are present but are insignificant compared with the volume of trade with third countries. This category includes, in particular, cheeses,

immunological products, agricultural machinery, milk and cream, and other products. 3. Opportunities for trade cooperation also arise as a result of the trade war between the USA and China. The introduction of additional customs duties on US products causes temporary increased competitiveness of EAEU goods, for which such measures do not apply. For example, parts for agricultural machines, acyclic esters, non-seed oats, carbamide resins, and others (Mursaliev, 2021; Panteleev et al., 2021). Table 1 shows that trade turnover with Russia’s traditional trading partners is declining: the EU’s share decreased from 49.6% in 2013 to 38.5% in 2020. Over the same period, Russia has tripled the share of the yuan in its foreign exchange reserves, which is ten times higher than the average for world central banks. Both countries hold similar views on many international issues. In recent years, their cooperation in the field of defense, security, cybernetics, and technology exchange has significantly expanded. Their foreign economic policies are also converging, responding to the mutual need to minimize the influence of the USA on them and, accordingly, act as a counterweight to the USA. Both countries strive to maintain and expand their cooperation without excessive dependence on each other. In this regard, Russia is beginning to strengthen its partnership relations with China, considering it as an alternative to a European capital, technology, and trade cooperation. The foreign economic aspects of the partnership with China in many areas, including energy trade and arms sales, were

Table 1 The turnover of Russia’s trade with key countries in 2013–2020 (%) The Whole World EU Germany Italy Netherlands Poland UK Finland France China Republic of Korea USA CIS EAEU Belarus Kazakhstan Ukraine Turkey

2013 100 49.6 8.9 6.4 9 3.3 2.9 2.2 2.6 10.5 3 3.3 13.4 7.2 4.1 2.8 4.7 3.9

2014 100 48.2 9 6.2 9.4 2.9 2.5 2 2.3 11.3 3.5 3.7 12.2 7.1 4 2.7 3.6 4

2015 100 44.8 8.7 5.8 8.4 2.6 2.1 1.9 2.2 12.1 3.4 4 12.6 8.1 4.6 3 2.8 4.4

2016 100 42.8 8.7 4.2 6.9 2.8 2.2 1.9 2.8 14.1 3.2 4.3 12.1 8.3 5 2.8 2.2 3.4

Source: authors based on the Customs Service of the Russian Federation (2022)

2017 100 42.1 8.5 4.1 6.7 2.8 2.2 2.1 2.6 14.9 3.3 4 12.5 8.8 5.2 3 2.2 3.8

2018 100 42.7 8.7 3.9 6.9 3.2 2 2.1 2.5 15.7 3.6 3.6 11.7 8.1 4.9 2.6 2.2 3.7

2019 100 41.6 7.9 3.8 7.3 2.7 2.6 2 2.2 16.7 3.6 3.9 12.2 8.7 5.1 3 1.7 3.9

2020 100 38.5 7.4 3.6 5 2.5 4.7 1.8 2.2 18.3 3.5 4.2 12.9 9.1 5 3.4 1.7 3.7

EAEU and BRI: Current Prospects of Mutual Cooperation

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reviewed. Although it is economically attractive for Russia to act as a transit for the transportation of goods from China to the EU and back, this is not the goal itself (Shamakhov & Sluchevsky, 2019). However, Russia is wary of China’s strengthening position in Asia, believing that the situation in Eurasia should be controlled jointly by China, Russia, and several other countries because the BRI can strengthen China’s influence in the region, especially due to tensions in Sino-American relations and the skepticism of the EU about the foreign policy of China, which forces China to focus on a new direction of its foreign economic policy—the fear of Eurasia and Africa. Table 2 proves that China’s share in the trade turnover of EAEU countries has been growing since the start of BRI. Nevertheless, Russia is attractive to China in terms of its geographical location. Russia is a kind of bridge connecting the two strongest economic zones of the Eurasian continent—the EU and East Asia. Goods from China can be transported to the EU through just two customs offices. Since 2015, the volume of freight traffic has been growing by double digits every year. In the first ten months of 2018 alone, the volume of cargo transported through Russia between China and Europe increased by 23%. Currently, existing railways and highways are used to a greater extent for transportation. Within the framework of the Project, modernization and expansion of existing transport lines are planned; in particular, the possibility of building a high-speed railway “Moscow-Kazan” is being considered,

which may become the first 770-kilometer railway in Russia, which will shorten the road from Moscow to Kazan for eight hours (from 11.5 to 3 hours) (Railian et al., 2021). However, China’s investment in Russia is limited only to large transactions. Private Russian enterprises are also seeking financing from China, which, despite its active investment policy throughout Eurasia, does not show large-scale investments in Russia. This is a pragmatic partnership based primarily on benefits for each of the parties. Simultaneously, their foreign policy is similar in many ways—to strengthen their positions by building a new world order. Therefore, at this stage, their relationship is developing fruitfully, being uncertain in the long term. Additionally, Russia is interested in coordinating actions within the EAEU. For example, there is no coordination of infrastructure development between large monopolies such as Russian and Kazakh railways.

4

Conclusion

It is possible to identify areas of practical implementation of the EAEU and BRI coupling: 1. To coordinate economic development strategies and policy measures; 2. To create joint productions and industrial parks to intensify industrial cooperation; 3. To interconnect the transport and logistics infrastructure.

Table 2 Trade turnover of Kazakhstan, Belarus, Armenia, and Kyrgyzstan with Russia and China for the period 2013–2020 (in %) Kazakhstan Export to Russia Import from Russia Export to China Import from China Belarus Export to Russia Import from Russia Export to China Import from China Armenia Export to Russia Import from Russia Export to China Import from China Kyrgyzstan Export to Russia Import from Russia Export to China Import from China

2013

2014

2015

2016

2017

2018

2019

2020

6.9 36.8 17.0 17.1

8.0 33.4 12.3 17.8

9.9 34.4 11.9 16.6

9.5 36.3 11.5 14.6

9.3 39.2 12.0 16.0

8.5 38.1 10.3 16.5

9.7 36.7 13.6 17.0

10.4 34.9 19.2 16.7

45.0 52.5 1.2 6.6

41.8 54.0 1.8 2.3

38.6 55.8 2.9 7.7

46.3 54.2 1.7 7.7

43.9 56.6 1.2 7.9

38.2 58.4 1.4 7.8

41.3 54.8 1.9 9.3

44.6 49.6 2.6 11.1

22.6 26.0 4.7 9.0

20.4 26.0 11.5 10.0

15.2 30.0 11.1 10.0

20.6 31.0 5.5 11.0

25.2 30.0 5.5 12.0

26.9 26.0 4.5 14.0

27.5 29.0 7.4 15.0

26.2 33.0 11.5 15.0

8.6 33.2 2.2 23.9

6.5 31.0 1.7 19.2

9.5 32.1 2.2 26.1

9.0 23.3 5.2 37.5

14.6 26.3 5.4 33.5

17.8 25.3 3.5 39.6

13.8 27.8 4.1 35.4

12.3 35.7 2.2 20.0

Source: authors based on the Trademap (2020)

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The processes of forming a common market for transport services and implementing a coordinated transport policy within the EAEU have been launched. Simultaneously, in addition to coordinating the main elements of the common market and its regulatory mechanisms, an assessment of the necessary modernization of the existing and construction of a new transport and logistics infrastructure is required. 4. To develop new transport routes in order to diversify their supplies not only of oil and gas but also of non-commodity exports; 5. To reduce trade barriers mutually and develop measures to stimulate investment; The EAEU seeks to liberalize foreign economic conditions, achieve preferential trade agreements with third countries. The PRC, as a rule, enters into bilateral agreements with individual countries defining trade and investment regimes. Currently, there are certain restrictions between the PRC and the EAEU countries, usually non-tariff ones, which can be revised from the position of coupling the EAEU and the BRI. They should work out the regulatory framework and tariff system for effective transit transportation through the territory of Russia because transport services can become one of the significant income items after the export of crude oil. 6. To deepen monetary and financial cooperation; In conclusion, SWOT analysis of the implementation of the coupling of the EAEU and BRI is provided in the article to demonstrate the possibilities of this coupling. The strengths include the following: 1. Territorial proximity of the EAEU countries and China; 2. The strategic geographical position of the EAEU countries (between China and the EU); 3. The similarity of the goals of the BRI and the EAEU in terms of increasing the integration of the Eurasian countries; 4. The EAEU countries are strategically important suppliers of certain types of goods and services for China; 5. China’s close, long-term cooperation with the EAEU countries; 6. The EAEU countries are participants of BRI; 7. The interest of the EAEU countries in Chinese investments in the development of infrastructure in their countries (railways, highways, logistics centers, ports, energy facilities; transmission lines and electricity transmission corridors, etc.); 8. China’s extensive financial capabilities;

I. N. Belova et al.

9. China’s active cooperation with the EAEU countries in all sectors, including trade and investment cooperation, healthcare, ecology, etc.). The weaknesses include the following: 1. Raw material orientation of the EAEU countries’ exports; 2. Low solvency of the EAEU countries; 3. The low percentage of attracting local resources for project development; 4. Lack of trust in China’s true investment motives; 5. Low transparency of the conditions and procedures for the tender selection of projects; 6. The trade deficit between China and several EAEU countries. There are the following opportunities: 1. Deepening and expanding the existing partnership; 2. Mutual interests in maintaining and ensuring stability and security on the Eurasian continent; 3. The economic effect of the realization of the transit potential of the EAEU countries (China-EU overland cargo transportation); 4. Expansion of the export potential of the EAEU countries; 5. Creating new jobs; 6. The increasing need for the development of various infrastructure facilities; 7. China’s assistance in combating the spread of COVID-19; 8. Optimization of the interconnection of the infrastructure of Europe and Asia; 9. Strengthening the interaction of all participating countries. The threats include the following: 1. Development by key countries (the USA, EU, and India) of their investment initiatives for the same EAEU countries; 2. Counter-propaganda by third countries of the coupling of the two strategies of the BRI and the EAEU; 3. The possibility of changing political regimes and leadership; 4. Restrictive measures for business in the post-pandemic period; 5. Inconsistency of the positions of the EAEU countries in building a partnership with China; 6. Admission of cheap products from China to the market of the EAEU countries, which may lead to structural degradation of the industries of the EAEU countries. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project № 060121-0-000.

EAEU and BRI: Current Prospects of Mutual Cooperation

References Customs Service of the Russian Federation. (2022, March 14). The results of foreign trade with all countries. Accessed February 21, 2022, from https://customs.gov.ru/statistic/vneshn-torg/vneshntorg-countries Glaziev, S. Y., Arkhipova, V. V., Ageev, A. I., Ershov, M. V., Mitjajev, D. A., Nagorny, A. A., et al. (2019). Questions and situations on the conjugation of the Eurasian Economic Union and the “Belt and Road” initiative between China and Russia. Eurasian Integration: Economics, Law, Politics, 3(29), 13–30. Accessed March 15, 2022, from https://www.eijournal.ru/jour/article/viewFile/231/216 Karmanov, O. (2020). Highlights of the Chinese direct investment in the EAEU and promotion of the investment via the pairing of the EAEU and the Silk Road Economic Belt. Eurasia. Expert, 3–4, 34–43. https://doi.org/10.18254/S271332140013185-0 Litvinova, T. (2020). Russia in the Greater Eurasian partnership: from civilization theory to political practice. Journal of Law and Administration, 16(2), 33–42. https://doi.org/10.24833/2073-8420-2020-255-33-42 Mursaliev, A. O. O. (2021). The EAEU and the OPOP – How can the superpowers of Eurasia interact within the framework of integration projects. Pravovaya paradigma [Legal Concept], 20(4), 24–33. https://doi.org/10.15688/lc.jvolsu.2021.4.3

273 Panteleev, A., Zhelyabovskaya, K., Ryabtsev, N., Khazhgerieva, A., & Petakchyan, N. (2021). Analytical report “Integration of the development strategy of the Eurasian Economic Union and the Chinese ‘Belt and Road Initiative’” : Macroeconomic Policy Department of EEC. Accessed April 21, 2022, from https://eec.eaeunion.org/ upload/medialibrary/822/Doklad_Kitay_short_17.08.pdf. Railian, D., Li, J., & Pogodin, S. (2021). Russia-China Cooperation: Linking the Eurasian Economic Union and Belt and Road Initiative. In R. Bolgov, V. Atnashev, Y. Gladkiy, A. Leete, A. Tsyb, S. Pogodin, et al. (Eds.), Proceedings of topical issues in international political geography (pp. 133–139). Springer. https://doi.org/ 10.1007/978-3-030-78690-8_12 Shamakhov, V. A., & Sluchevsky, V. V. (2019). Some aspects of pairing projects EAEU – “One Belt — one Way”. Eurasian Integration: Economics, Law, Politics, 1, 28–33. Accessed April 15, 2022, from https://www.eijournal.ru/jour/article/view/205/190 Trademap. (2020). List of supplying markets for a product imported by Kazakhstan, Belarus, Armenia, Kyrgyzstan, 2013–2020. Accessed April 19, 2022, from https://www.trademap.org/Country_ SelProductCountry_TS.aspx?nvpm=1%7c398%7c%7c%7c% 7cTOTAL%7c%7c%7c2%7c1%7c1%7c1%7c2%7c1%7c2%7c1% 7c1%7c1

Assessing the Economic Positions of the European Union Countries in the Context of Transforming Foreign Economic Relations and Implementing a New Industrial Strategy for Europe Tatiana S. Malakhova , Diana M. Madiyarova and Dinara S. Kadyrbekova

Abstract

The paper examines the current state of the EU countries, evaluates key indicators applied in the trade and economic area that indicate the countries’ share in world markets and identifies problems and contradictions that affect the development prospects of an integration group. The theoretical and methodological basis of the research includes the historical-logical and dialectical principles and contradictions, as well as the method of scientific abstraction. The process-system approach, used in an in-depth analysis of the key economic indicators of the EU members, was of particular importance in justifying the need to reduce economic inequality between the EU countries. The paper calculates the relative share of integration group countries in world exports and imports. Based on this data, the forecast of the relative share of Germany in world exports until 2025 was calculated, and the implementation scenarios were indicated (with a low and high degree of probability). Besides, for almost every country, the coverage ratio of imports of goods to exports was calculated, and a forecast was made for this indicator for individual countries of Central and Eastern Europe and the Southern region of the European Union. Following the identified problems and contradictions in the EU countries, the authors concluded that the existing economic inequality between the EU countries does not allow certain countries of Central and Eastern Europe and the Southern region of the EU to strengthen their positions within and beyond the European market. T. S. Malakhova (✉) Kuban State University, Krasnodar, Russia D. M. Madiyarova Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia L. Civín The University of St. Gallen, St. Gallen, Switzerland D. S. Kadyrbekova Kazakh Academy of Sport and Tourism, Almaty, Kazakhstan

, Lubomír Civín

,

Currently, the EU countries are implementing a New Industrial Strategy for Europe based on plans to achieve net-zero greenhouse gas emissions, net-zero environmental pollution, and digital leadership. Thus, the paper presents the main elements of the mentioned strategy, specifies the strengths of the EU in the areas of industrial development, and identifies the main opportunities that the EU might receive after the implementation of this strategy. Keywords

Integration group · European Union · International economic relations · Risks and threats · Strategy · Digital leadership · Competitiveness

JEL Codes

F02 · F15 · F63

1

Introduction

In the current context, the foreign economic relations of the EU countries are somewhat complex and contradictory. In the EU, there are countries with different models of economic development, socio-cultural characteristics, and development potential. Thus, many economists and political scientists analyze and compare the economic situation of all union partner countries, focusing on the opportunities and threats arising from their interaction. For example, it is well-known that the service sector is actively developing in the countries of the Southern region of the EU, particularly tourism and agriculture. The countries of Western Europe primarily concentrate on heavy and light industry, which is also actively developing in the leading economies of the union countries along with innovative technologies. Therefore, despite implementing the strategies, programs, projects, and other

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_48

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initiatives in the EU, the economic inequality between the EU countries is growing. In the last decade, inequality in the integration group has increased due to the aftereffects of globalization, technological changes, tax policy, and the economic crisis (Malakhova & Kolesnikov, 2019, pp. 38–41). This inequality hinders economic growth in many European countries and can lead to social conflicts and contradictions between the partner countries. Many EU countries, particularly Central and Eastern European countries (CEECs), cannot withstand the competition within and beyond the EU. In this situation, particular attention should be paid to the relative share of the countries of the Southern region of the EU and the CEECs in world exports and world imports and the calculation of the coverage ratio of imports of goods to exports. These indicators will help identify the positions of these regions within the EU. The countries’ transition to a new world economic and technological context can help these countries shift to dynamic development. However, this transition might simultaneously bring them new challenges and threats. Therefore, in the current context, it is crucial to assess the positions of partner countries in the common European market to identify weaknesses and threats that might become a barrier in the transition to a new practice (Glazyev, 2018). Thus, it is essential to analyze the strategies and programs developed in the EU to assess their impact on the countries of Western Europe, the CEECs, and the countries of the Southern region of the EU.

2

Materials and Methods

In today’s environment, different schools of economics have different views on the position of countries in the global economy. The paper closely focuses on the economic positions of the EU countries and their transformation during the transition to a new world economic and technological context. Many scholars agree that despite the established common European market in the EU, the problem of economic inequality among partner countries still exists. For example, in their research, Jianu, Dinu, Huru, and Bodislav analyze the relationship between income inequality and the economic situation of the EU countries in terms of the level of development of each member of the integration group (Jianu et al., 2021, pp. 2–16). Considering the current conditions, Dauderstädt and Keltek note that experts vastly underestimate the true level of inequality in the EU since its calculation as a basis requires a lot of internal and external factors, which are quite challenging to measure and evaluate (Dauderstädt & Keltek, 2011, pp. 44–51). Besides, the structural imbalances within the eurozone and an increase in income inequality significantly transform cross-country relations (Bogliacino, 2014, pp. 288–294). For instance, in his research on economic inequality between the EU

countries, Atkinson relies on three approaches: (a) the study of history, (b) the economic analysis, and (c) policy framework. These approaches allow scholars to identify the development trajectory of the EU countries through the prism of their economic income inequality (Atkinson, 2013). This is because, in addition to poverty, other socio-economic problems arise because of income inequality like the suppression of economic growth, the growth of crime rate, the decline in the quality of education and health care, and the expansion of political inequality (Škorić et al., 2019, pp. 107–126). Thus, the EU countries should reduce interethnic economic inequality because this problem directly affects social tensions in the union (Follesdal, 2021). The mentioned research and approaches of the scholars allow assessing the positions of the EU countries from different perspectives in the context of present-day developments and development trends.

3

Results

It is necessary to highlight that the foreign economic relations of the EU countries (Amate-Fortes et al., 2017, pp. 438–452) were also affected by the economic crisis, the migration crisis, and COVID-19, which have transformed the positions of the EU countries in the world economy. Therefore, to assess the positions of the EU countries in world markets, we calculate the relative share of these countries in world exports and imports and identify their medium-term and long-term development trajectories. Thus, from 2014 to 2018, the relative share of the EU countries in the world export of goods did not change significantly. This indicator was the highest in the Western European countries. In Belgium, the share of world exports was 2.5% in 2014, 2.4% in 2015, 2.5% in 2016, 2.5% in 2017, and 2.5% in 2018. The share of Belgium in world exports remained virtually unchanged during the presented period. Germany had the highest share in world exports compared to other EU countries. It was 8.0% in 2014, 8.2% in 2015, 8.5% in 2016, 8.5% in 2017, and 8.3% in 2018. Germany’s share in world exports increased by 0.3% in 2018 compared to 2014. The UK’s exit from the EU in 2020 significantly affected the position of this integration group in the world. The UK’s share in world exports was 2.6% in 2014, 2.7% in 2015, 2.6% in 2016, 2.6% in 2017, and 2.5% in 2018. The UK was one of the largest economies in the EU; it used to strengthen the position of this integration group in the world economy. As for other regions of the integration group, their share in world exports was lower than in individual countries of Western Europe. Thus, during the analyzed period, this indicator did not change significantly in the Central and Eastern European countries of the EU. Bulgaria’s share in world exports was 0.2% in 2014, 0.2% in 2015, 0.2% in 2016, 0.2% in 2017,

Assessing the Economic Positions of the European Union Countries in the Context of. . .

and 0.2% in 2018. There were no changes in this indicator during the analyzed period. In Hungary, this indicator was 0.6% in 2014, 0.6% in 2015, 0.7% in 2016, 0.7% in 2017, and 0.7% in 2018. This indicator increased by 0.1% in 2018 compared to 2014. In the Southern European countries, the share in world exports exceeded 1.0% only in Spain and Italy. Spain’s share in world exports for the analyzed period varied from 1.7 to 1.9%, whereas Italy’s share exceeded Spain’s share almost twofold. Italy’s share in world exports was 2.8% in 2014, 2.8% in 2015, 3.0% in 2016, 3.0% in 2017, and 2.8% in 2018. Nevertheless, Germany is the unquestionable leader in the analyzed indicator. Based on this, we forecast (with a low and high degree of probability) the share of Germany in world exports of goods until 2025. In general, calculations showed that Germany’s share in world exports could be 8.45% in 2022, 8.48% in 2023, 8.52% in 2024, and 8.55% in 2025. However, due to the aftereffects of external challenges and threats, Germany’s share of world exports might increase (with a high degree of probability) or decrease (with a low degree of probability). In a positive scenario, Germany’s share might increase to 9.09% by 2025. However, the COVID-19 pandemic and other factors still directly affect the position of Germany in world markets. Thus, a pessimistic scenario might occur, according to which Germany’s relative share might decrease to 8.01% by 2025. The relative share of the EU countries in world imports of goods was also unstable. For example, Germany’s share in world imports of goods was 6.5% in 2014, 6.4% in 2015, 6.7% in 2016, 6.6% in 2017, and 6.6% in 2018. Germany’s share in world imports increased by 0.1% in 2018 compared to 2014. In Portugal, this figure varied from 0.4 to 0.5%. Portugal’s share in world imports of goods increased by 0.1% in 2018 compared to 2014. In France, on the contrary, there was a decrease in the analyzed indicator by 0.1% in 201, compared to 2014. The share of Sweden in world imports was 0.9% in 2014, 0.8% in 2015, 0.9% in 2016, 0.9% in 2017, and 0.9% in 2018. This indicator increased by 0.1% in 2018 compared to 2015. Thus, many Southern countries and CEECs of the EU cannot withstand competition in the common economic space, their lending dependence is increasing, and the expansion of TNCs and TNBs of Western European countries is also accelerating. It leads to the fact that the Southern countries and CEECs increase their import dependence on partner countries, destabilizing their internal economic processes. The calculation of the coverage ratio of imports to exports can confirm this trend. This ratio is the ratio of the value of a country’s exports to the value of its imports. If the ratio is less than 100%, then the trade balance is negative; if it is higher than 100%, it is positive.

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Kp =

Ec
100%, Ic

ð1Þ

where: Kp—coverage ratio; Ec—the value of a country’s exports; Ic—the value of a country’s imports. The calculations have shown that in almost all Western European countries, the coverage ratio of imports of goods to exports is more than 100%. Therefore, there is a positive balance of trade in these countries. In Belgium, this indicator was 104.0% in 2010, 101.6% in 2012, 104.0% in 2013, 104.1% in 2014, 105.7% in 2015, 105.0% in 2016, 105.3% in 2017, and 103.7% in 2018. Germany showed a similar positive trend in this indicator. The coverage ratio was 119.4% in 2010, 120.9% in 2012, 121.7% in 2013, 123.85% in 2014, 126.2% in 2015, 126.4% in 2016, 124.5% in 2017, and 121.4% in 2018. However, the calculations showed that the most unstable situation for this indicator was in the CEECs and the countries of the Southern region of the EU. Only certain EU countries became exceptions. In Hungary, the coverage ratio of imports of goods to exports was 108.2% in 2010, 109.3% in 2012, 109.4% in 2013, 108.2% in 2014, 110.5% in 2015, 112.7% in 2016, 109.5% in 2017, and 106.8% in 2018. Thus, the coverage ratio decreased by 2.7% in 2018 compared to 2017. In Italy, the coverage ratio also exceeded 100%. The indicator was 102.5% in 2012, 108.1% in 2013, 111.7% in 2014, 111.2% in 2015, 113.2% in 2016, 111.8% in 2017, 109.1% in 2018. The coverage ratio decreased by 2.7% in 2018 compared to 2017. Slovenia has had a positive trade balance since 2014, and the coverage ratio exceeded 100%. The coverage ratio was 101.6% in 2014, 102.7% in 2015, 103.6% in 2016, 102.4% in 2017, and 100.6% in 2018. Here, the coverage ratio increased by 6.6% in 2018 compared to 2010. However, it decreased by 1.8% compared to 2017. A positive trend in the analyzed indicator was observed in the Czech Republic. In the rest of the CEECs and the Southern region countries of the EU, the coverage ratio of imports of goods to exports was below 100% for the analyzed period. A similar trend was observed in almost all countries of the Southern region, which makes them dependent on the countries of Western Europe and other countries of the world economy. We calculated the forecast data for the specified indicator for individual CEECs and the countries of the Southern region of the EU for 2022–2023 (Table 1). These calculations show no significant positive changes in the analyzed indicator. The coverage

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Table 1 The coverage ratio (%) of imports to exports for 2015–2021 and the forecast calculation until 2023 in the selected EU countries Countries Greece Cyprus Malta Poland Romania Czech Republic Estonia

2015 59.4 34.0 58.6 102.1 86.8 111.7 88.4

2016 58.2 28.4 60.9 102.2 85.2 113.8 88.1

2017 57.4 36.0 60.1 100.2 82.8 111.5 87.4

2018 60.7 46.8 53.7 97.8 81.8 109.7 89.0

2019 55.9 31.0 62.4 97.8 84.7 111.1 89.1

2020 56.0 31.2 62.3 97.9 84.8 111.2 89.2

2021 61.4 39.6 57.2 101.5 85.1 112.6 87.2

Forecast 2022 59.1 39.4 55.5 100.7 83.5 111.3 88.0

2023 58.8 39.6 55.8 99.8 82.1 110.9 88.4

Source: Calculated by the authors

ratio of imports of goods to exports will vary from 58.8% to 59.1% in Greece between 2022 and 2023. Thus, the analysis shows that the coverage ratio will be 59.1% in 2022 and 58.8% in 2023. As for Cyprus, there will also be no significant changes in this indicator: 39.4% in 2022 and 39.6% in 2023. This trend shows that the trade balance in these countries will remain negative, leading these countries to become even more dependent on imported goods. As for Malta, the coverage ratio could be 55.5% in 2022 and 55.8% in 2023. The indicator will decrease by 2.8% in 2023 compared to 2015. An unstable situation might remain in Poland in terms of the analyzed indicator. The calculations have shown that this indicator will be 100.7% in 2022 and 99.8% in 2023. If the mentioned trend becomes real, the coverage ratio will decrease by 2.3% in 2023, compared to 2015. In Romania, the coverage ratio could be 83.5% in 2022 and 82.1% in 2023. This indicator might decrease by 4.7% in 2023 compared to 2015, further leading to the dependence on imports for the specified country. A positive trend will appear in the Czech Republic regarding the analyzed indicator (111.3% in 2022 and 110.9% in 2023). Thus, a slight decrease in the coverage ratio by 0.8% is possible in 2023, compared to 2015. As for Estonia, the calculations forecast no significant changes in this indicator. The coverage ratio could be 88.0% in 2022 and 88.4% in 2023 (Federal State Statistics Service of the Russian Federation (Rosstat), 2019, pp. 251–252). Based on the conducted analysis, it is necessary to emphasize that in the current context, to strengthen the CEECs and the countries of the Southern region of the EU, it is essential to implement priority initiatives for the development of the real sector of the economy of the EU countries, which include the development of light and heavy industry and innovative technologies. For example, to strengthen cross-country relations in the EU, a New Industrial Strategy for Europe has been developed, which identifies the strengths of the partner countries and the problems that should be addressed as soon as possible.

4

Discussion

In the context of increasing global competition in world markets, the EU countries need to increase their relative share in world exports. Today’s challenges and threats are pushing the leading countries of the integration group to develop new programs and strategies for advancing the integration group further. A New Industrial Strategy for Europe is one of them (European Commission, 2020). Figure 1 shows the key directions for developing relations between the partner countries of the EU through the development of European industry, which will help strengthen the internal market of the EU in world markets. It is critical to specify that the COVID-19 pandemic temporarily paralyzed crosscountry relations within and beyond the EU. However, this strategy is designed for long-term cooperation between partner countries. It focuses on the strengths of the internal market of the EU, i.e., a solid industrial base, fundamental and applied research, and highly qualified human resources. There is no doubt that the highlighted strengths are the foundation for countries’ transition to a new world economic and technological context. The strategy pays particular attention to the European Green Deal. It is a plan to achieve net-zero greenhouse gas emissions and net-zero environmental pollution. Thus, the European Commission has developed several proposals to improve the European Union’s climate, transport, and energy policies to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels. Another important direction in a New Industrial Strategy for Europe is the development of digital technologies and ways of doing business (strengthening the European Digital Single Market). As a general matter, digital technologies significantly transform social life, ways of working, doing business, and other essential areas. Digital transformation is often associated with a change in the entire course of activities of enterprises, banking structures, and other bodies of the world economy. This

Assessing the Economic Positions of the European Union Countries in the Context of. . . Fig. 1 Areas for developing foreign economic relations of the EU countries in the context of implementing a New Industrial Strategy for Europe. Source: Created by the authors

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Geopolitical problems and contradictions in the world economy significantly affect the development of industry in Europe (global competition, protectionism, and others)

Strengthening the EU internal market by developing European industry Strengths of the EU internal market

Solid industrial base

Fundamental and applied research

European Green Deal – a plan to achieve net-zero greenhouse gas emissions and net-zero environmental pollution

Highly qualified human resources

Digital Leadership – the development of digital technologies and ways of doing business (strengthening the Digital Single European Market)

The transition from linear production to a circular economy, the increase of investment in relevant research, the development of innovations in these areas, the development of advanced infrastructure that helps generate new employment opportunities, the expansion of production scale, and the retention of competitiveness on the world arena

process usually demands the citizens to adopt new work methods and radically change the approaches to their activities. European technological sovereignty is formed by ensuring the integrity and resilience of the infrastructure and database, networks, and communications. It will require creating appropriate and favorable conditions for the development of the entire Europe by activating its own information, communication, and technological capacities. These steps will gradually reduce the dependence on other countries and regions of the world in these areas. During the implementation of this strategy, there will be a gradual transition from linear production to a circular economy, an increase in investment in relevant research, the development of innovations in these areas, the development of advanced infrastructure that will help generate new employment opportunities, the expansion of production scale, and the retention of competitiveness on the world arena. However, it is essential to mention that not all EU countries are ready to shift to a new economic and technological context. The analysis shows that the share of the CEECs in world exports has not changed over ten years. The countries of the Southern region of the EU show a similar situation. Moreover, the calculations show that in many CEECs and the countries of the Southern region of the EU,

the coverage ratio of imports to exports is below 100%, indicating their negative trade balance. Therefore, in the current context, it is vital to reduce the economic inequality (gap) between these groups of EU countries (Malakhova et al., 2019, pp. 195–202).

5

Conclusion

Thus, in the current context, the EU countries are striving to increase their relative share in world exports. The countries of Western Europe already retain key positions in this indicator. However, the calculations show that the share of Germany in world exports might either increase to 9.09% (with a high degree of probability) or decrease to 8.01% (with a low degree of probability) by 2025 due to the influence of external challenges and threats. Within the analyzed period, there were no significant changes in this indicator in the CEECs of the EU. As for the Southern European countries, only Spain’s and Italy’s relative share in world exports exceeded 1.0%. In other Southern European countries, the share did not exceed 0.2%. Thus, we can conclude that the cooperative ties between the partner countries of the integration group practically did not strengthen the positions of the countries of the

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Southern region of the EU and CEECs. Besides, in some countries of these regions, the share in world imports increases every year, making them more dependent on other countries. Second, we calculated the coverage ratio of imports to exports in the selected countries of the EU for 2015–2021 and made a forecast of this indicator for individual countries until 2023. It is worth mentioning that in almost all Western European countries, the coverage ratio of imports of goods to exports exceeds 100%. Thus, the countries have a positive balance of trade. The most unstable situation for this indicator was in the CEECs and the Southern region countries of the EU. Only individual countries of the EU became the exception. Third, we studied the areas for developing foreign economic relations of the EU countries in the context of implementing a New Industrial Strategy for Europe that foresees digital leadership and the greening of the economy. Thus, we conclude that there might be a gradual transition from linear production to a circular economy during the implementation of this strategy.

References Amate-Fortes, I., Guarnido-Rueda, A., & Molina-Morales, A. (2017). Crisis and inequality in the European Union. European Review, 25(3), 438–452. https://doi.org/10.1017/S106279871700014X Atkinson, A. B. (2013). Reducing income inequality in Europe. IZA Journal of European Labor Studies, 2, 12. https://doi.org/10.1186/ 2193-9012-2-12

T. S. Malakhova et al. Bogliacino, F. (2014). Inequality and Europe 2020. Intereconomics, 49(5), 288–294. https://doi.org/10.1007/s10272-014-0511-1 Dauderstädt, M., & Keltek, C. (2011). Immeasurable inequality in the European Union. Intereconomics, 46(1), 44–51. https://doi.org/10. 1007/s10272-011-0364-9 European Commission. (2020). a new industrial strategy for Europe (COM(2020) 102 final). Brussels, Belgium. Retrieved March 10, 2020, from https://eur-lex.europa.eu/legal-content/EN/TXT/? uri=CELEX:52020DC0102 Federal State Statistics Service of the Russian Federation (Rosstat). (2019). Russia and the European Union member states, 2019: Statistical collection. Rosstat. Follesdal, A. (2021). A just yet unequal European Union: A defense of moderate economic inequality. Review of Social Economy, 81, 8–36. https://doi.org/10.1080/00346764.2021.1967433 Glazyev, S. Y. (2018). Leap into the future. Russia in the new technological and world economic structures. Litres. Jianu, I., Dinu, M., Huru, D., & Bodislav, A. (2021). Examining the relationship between income inequality and growth from the perspective of EU Member states’ stage of development. Sustainability, 13(9), 5204. https://doi.org/10.3390/su13095204 Malakhova, T. S., & Kolesnikov, N. P. (2019). Trends and contradictions of the global economic crisis and transformation of the world financial institutions. European Journal of Economics and Management Sciences, 1, 38–41. Malakhova, T. S., Dubinina, M. A., Maksaev, A. A., & Fomin, R. V. (2019). Foreign trade and marketing processes in the context of sustainable development. International Journal of Economics and Business Administration, 7(SI2), 195–202. Retrieved March 10, 2020, from https://www.um.edu.mt/library/oar/bitstream/ 123456789/51278/1/Foreign%20Trade%20and%20Marketing% 20Processes%20in%20the%20Context%20%20of%20Sustainable %20Development.pdf Škorić, B., Bjelić, J., Nikolić, M., & Chirosa, L. (2019). Economic inequality and poverty in European Union. Acta Economica, 17(31), 107–126. https://doi.org/10.7251/ACE1931107S

Geo-Economic Interests of the Republic of Turkey in the Republic of Uzbekistan Inna V. Andronova

and Ivan O. Khabarov

Abstract

This research considers the economic interests of the Republic of Turkey in the Republic of Uzbekistan, analyzes the current state and structure of trade turnover between the two countries, and investigates the situation in investment and educational cooperation. The tools for promoting Turkey’s geo-economic interests are analyzed on the example of its interaction with Uzbekistan. Keywords

Geo-economic interests · Republic of Turkey · Republic of Uzbekistan · Regional economic cooperation · Trade and investment partnership

JEL Codes

F51 · F15 · F14 · N45 · F21

1

Introduction

At the present stage of the development of the global economic complex, we can observe an unprecedented aggravation of international competition, forcing us to conclude that the analysis of trends in the development of the foreign economic activity of countries exclusively through the prism of their economic interests is no longer relevant. The desire to develop new positions and strengthen the existing positions in the occupied markets, increase control over suppliers of resources required by the national economic complex, and expand military and political influence by deepening economic integration is far from a complete list

I. V. Andronova · I. O. Khabarov (✉) RUDN University, Moscow, Russia

of goals that a particular country may pursue when implementing its foreign economic strategy.

2

Methodology

Against the background of the crisis phenomena observed in the world political and economic systems, one can observe not only the clash of the largest players in the world economy but also attempts by individual regional players to realize their global ambitions. Turkey is one of the players. The country takes various steps to form and consolidate its role as a global mediator (clipboard) in the clash of global players, a kind of bridge between East and West. However, Turkish interests are not limited to strengthening political influence alone. They also extend to the economic sphere. Expanding the role of the Turkish economy as an intermediary between the warring parties also seems to be one of the possible goals pursued by the Turkish leadership. In this regard, it is worth focusing on the fact that the effectiveness of the role of a link between the economic complexes of distanced participants in the world economy can be unrealizable without the presence of a formed pool of regional economic partners and political allies. The presence of this pool of satellites helps in the implementation of strategic plans for the expansion of zones of political and economic influence and provides the necessary expertise formed due to the opportunity to test mechanisms for promoting their geo-economic interests on a smaller scale. One of the examples of such economic and political regional cooperation is the economic and political partnership between Turkey and the Republic of Uzbekistan. The relations between the Republic of Turkey and the Republic of Uzbekistan have a long history, which is due to a wide range of factors, including the historical, linguistic, cultural, and ethnic proximity of the two countries and peoples, which, in turn, create the basis for the development

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_49

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of a broad system of trade and investment cooperation between these subjects of the world economy.

3

Results

It would be a mistake to believe that historical and cultural proximity alone can be a driver for forming a positive modality of political and economic cooperation between the two countries. Thus, Turkish-Uzbek relations were going through a period of significant calm, to say the least—cooling, the reasons of which lay in the political sphere. For example, Turkey became a refuge for a number of prominent representatives of the Uzbek political opposition. Turkey was also one of the signatories of the UN report condemning the actions of representatives of the power bloc of the Republic of Uzbekistan during the Andijan events (Tolipov, 2021). Relying solely on the historical context in matters of topical foreign economic and foreign policy relations is impossible. Therefore, we can list at least three initiatives for the intensification of Uzbek-Turkish relations that have not been implemented: • The first President of the Republic of Uzbekistan, Islam Karimov, spoke about the possibility of creating a supranational association, which is a commonwealth of Turkicspeaking countries, one of the most significant members of which could be the Republic of Turkey. This project remains unfulfilled. • In the 1990s, Turkey proposed the creation of a common market between Turkey and the countries of Central Asia. It was assumed that the Turkish lira would be the main currency in this union. This initiative also remained unrealized. • The political leadership of the Central Asian republics also refused to support Turkey’s actions in the context of the issues of Northern Cyprus and the Nagorno-Karabakh conflict (Tolipov, 2021). The situation related to the activities of the Hizmet movement, founded by the well-known Turkish public and religious figure Fethullah Gulen, is worth mentioning separately. The process of active creation of educational institutions created under the auspices of this movement could be observed in many countries in the post–Soviet space, including Azerbaijan and Central Asian countries. In Uzbekistan, they were closed by 2001, which may be due to the general decline in the degree of relations between Tashkent and Ankara and the desire of the Uzbek leadership to limit the possibility of forming a soft pro-Turkish lobby at home. The turning points of the Turkish-Uzbek political and economic cooperation can be considered the visits of the President of the Republic of Uzbekistan, Shavkat

Mirziyoyev, to Turkey in October 2017 and the visit of the President of the Republic of Turkey, Recep Tayyip Erdogan, to Uzbekistan in the spring of 2018. It is worth noting that there have been no such state visits at the highest level since 1999. During the visit of Shavkat Mirziyoyev, a joint statement was signed to intensify bilateral contacts and create a Strategic Cooperation Council, co-chaired by the heads of both countries. One of the announced goals of economic cooperation between the two countries is to achieve a mutual trade turnover of $5 billion. To understand the current situation in trade turnover between the Republic of Turkey and the Republic of Uzbekistan, it is worth reflecting on the major group of products imported by Uzbekistan from Turkey and those exported by it to Turkey. The total trade turnover between the countries in 2021 amounted to $3388.3 million (imports of Uzbekistan from Turkey amounted to $1698.3 million, and exports from Uzbekistan to Turkey were $1690.1 million). The most significant article of Uzbek imports from Turkey valued at $820.8 million was imports of machinery and equipment. Chemicals were the second major part of Turkish imports to Uzbekistan ($300.1 million). The third place belongs to industrial goods, the total value of which was $287.2 million. The dominant export item of Uzbekistan to the Republic of Turkey is industrial goods ($1376.8 million) (Review.uz, 2022). Some points in the previous paragraph should be considered more carefully. The dominant article of Uzbek exports in Turkey is industrial goods, of which 46% are copper and products made from it. The share of cotton fiber and products made from it equals 30%. The share of zinc and products made from it equals 7.4% (Nurdinova, 2022). Thus, through cooperation with Uzbek suppliers of copper and its products, the Turkish economy receives the necessary raw materials (inputs) required for the electrical and electrical engineering industries, radio electronics and instrumentation, and the production of brass (alloys with zinc) and bronze (alloys with other elements)—industries implying a high added value. The production of copper wire and pipes is also one of the related branches of the Turkish construction industry, which is one of the most significant drivers of the growth of the Turkish economy. It is also necessary to pay attention to cotton fiber and products exported from Uzbekistan. This group of goods also supplies one of the most developed and highly marginal sectors of the Turkish economy—the light industry. In 2021, the export revenue of this sector of the Turkish economy amounted to $12.9 billion. The geography of deliveries covered more than 200 countries and regions of the world. It is planned to expand further the quantitative and value expression of Turkish exports of light industry products— up to $15 billion in 2022. On the one hand, such goals seem ambitious (however achievable, since, for example, the

Geo-Economic Interests of the Republic of Turkey in the Republic of Uzbekistan

volume of exports of this sector of the Turkish economy to the USA in 2022 should exceed $1 billion, which is a great achievement given the highly competitive American market). On the other hand, these goals are socially significant, given the high involvement of labor resources (more than four million people) and the significant role of small and medium-sized businesses (more than 40 thousand enterprises) in the functioning of this industry (Aliiev, 2022). The share of the Republic of Uzbekistan in the total volume of Turkish exports may seem relatively small (about 0.75%). Nevertheless, the Uzbek economy, which has the capacity to export raw materials, is one of the important suppliers of the Turkish industrial complex with products necessary to maintain the production cycle. Simultaneously, the Republic of Uzbekistan acts as a buyer of machines and equipment, finished products, and chemical products, which together account for about 75% of the total volume of Turkish exports to Uzbekistan. The development of foreign trade relations with Uzbekistan is facilitated by the presence of historical, cultural, linguistic, and religious proximity, as well as political will. Turkey can sell goods that imply significant amounts of added value and form a stable and predictable channel of supplying the Turkish economy with products of the raw material spectrum necessary for the production of products with high added value. In the total structure of the foreign trade turnover of the Republic of Uzbekistan, almost 60% is occupied by only five countries: the Russian Federation—$7.517 billion (the share of the Russian Federation in the trade turnover of Uzbekistan is 17.87%), China—$7.441 billion (17.69%), Kazakhstan—$ 3.911 billion (9.3%), Turkey—$3.388 billion (8.05%), and South Korea—$1.89 billion (4.49%) (State Committee of the Republic of Uzbekistan on Statistics, 2021). Over the past years, Turkey has risen to fourth place among Uzbekistan’s foreign trade partners in value terms, surpassing South Korea. However, the current level of cooperation has broad prospects for growth. The Republic of Turkey and Uzbekistan are interested in this growth because the imposed system of foreign trade relations allows Uzbek goods to more actively penetrate the capacious European market in the form of raw materials for Turkish products and in the form of finished products, which implies significant restrictions and, therefore, is relatively rare. It is worth noting that Turkey experiences difficulties competing with Russia and China primarily due to the lack of a sufficiently developed logistics infrastructure covering Central Asia, which leads to steps to study the issue of using the Navoi-Turkmenbashi-Baku-Tbilisi-Kars railway transport corridor, which will connect the railways of Uzbekistan, Turkmenistan, Azerbaijan, and Georgia with the transport network of Turkey. This railway will allow Uzbekistan to provide access to the Mediterranean Sea through the Turkish port of Mersin. In this regard, the Turkish-Chinese project on

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the implementation of the trans-Caspian transport corridor, which connects the countries of the Turkic world, deserves special mention. The result of this project should be the strengthening of the Turkish transport dominance in the region, which leads to the expansion of export flows of Turkish goods to the emerging markets of the Central Asian region. It also provides the Turkish economy with the raw materials and inputs it needs (Panfilova, 2022). In the context of broad-format trade and economic cooperation between the Republic of Turkey and the Republic of Uzbekistan, it is impossible not to pay attention to the visit of Recep Tayyip Erdogan to Tashkent at the end of March 2022, which resulted in the signing of ten program documents, including preferential trade agreements, a framework agreement on cooperation in the military and defense spheres, and an agreement on the transfer of convicts. An agreement was also reached to raise the level of relations between the countries to the level of a comprehensive strategic partnership (Gazeta.uz, 2022). Within the framework of the signed agreement on preferential trade, a list of goods covered by this agreement was approved. It consists of 12 nomenclature groups for each of the participants. Thus, the list of products supplied by the Uzbek economy is dominated by agricultural products (vegetables, beans, almonds, walnuts, peanuts, dried apricots, raisins, dried peaches, pears, tamarind, and other fruits). The list of Turkish products is dominated by the products of the industrial spectrum, including electrical transformers and inductors, their parts, connectors and conductors, pipes, rolled ferrous metals, and centrifugal pumps. Signing the preferential trade agreement goes hand in hand with the ambitious plans of both sides to achieve not only the volume of trade turnover in 2022 in the amount of $5 billion but also to expand this indicator to $10 billion in the short and medium term for the development of trade and economic cooperation between Turkey and Uzbekistan (Gazeta.uz, 2022). The signing of new agreements aimed at the cooperation of the Turkish military-industrial complex with the Republic of Uzbekistan, as well as the statement of the President of the Republic of Turkey on the readiness to share the resources of the defense industry, the level of development of which is relatively high, also deserves special attention. As a rule, the cooperation of countries in the supply of military products indicates not only the existing economic cooperation related to geo-economic relations but, rather, the presence of military-political mutual understanding. When supplying weapons of its production to a particular country, the supplier country, as a rule, proceeds from the paradigm that these weapons will not be used against it or against its interests, which, in essence, forms an unspoken alliance, at least a mutually acceptable coordination system. Thus, using the example of cooperation between the Turkish military-

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industrial complex and Uzbekistan, one can observe how the realization of one of the most important geo-economic interests of Turkey—the occupation and expansion of positions in regional and global markets of goods with high added value, also leads to the realization of the geopolitical interests of the country, expressed in the expansion of mutual economic integration and military-political blocs of the two countries. The activity of Turkish investment capital in Uzbekistan deserves special attention. The volume of investments, the donors of which are Turkish companies, in the national economic complex of Uzbekistan for 2016–2021 amounted to $2.29 billion. Since 2017, a significant acceleration of the investment process can be observed. In 2016, the volume of Turkish investments in the economic complex of Uzbekistan amounted to 0.4% of the total volume of foreign investments. This figure reached 9.3% in 2020 and 11.1%, or $1.18 billion in 2021 (Nurdinova, 2022). This puts Turkey in third place in terms of foreign investment. This trend can be explained, to a large extent, by the general revival of economic cooperation between the two countries, which followed the mutual visits of the heads of countries. As of May 1, 2021, about 12.5 thousand enterprises with the participation of foreign capital operated on the territory of the Republic of Uzbekistan. Of these, 1714 are companies with Turkish business participation (about 13.7%). From January to April 2021, the Republic of Turkey became the leader in the number of companies being created compared to other countries (164 companies). The key industries-recipients of the Turkish capital also deserve attention. The most active Turkish business manifests itself in the construction sector, mining, manufacturing, and trade. Several major projects are being implemented. For example, Turkish entrepreneurs are engaged in constructing power generating capacities, the total productive capacity of which amounted to 1400 MW. Thus, the company Çal{k Enerji, an energy company belonging to the multidisciplinary holding Çal{k Holding, commissioned the second combined-cycle installation of the Navoi thermal power plant. A new thermal power plant has also been launched in the Kibrai district of the Tashkent Region; the construction of a thermal power plant in the Khavast district of the Syrdarya Region has begun. In the context of the modernization program of the Uzbek energy sector, it is planned to implement another 20 projects in the field of energy generation, the planned volume of investments for which is $12 billion. The implementation of these projects is planned with the use of a public-private partnership mechanism. The period for arranging the necessary power-generating capacities is until 2026 (Artykov, 2022). Another example is the participation of Turkish companies in the capital of Uzbek enterprises involved in the production of agricultural products. As of March 2022,

I. V. Andronova and I. O. Khabarov

the volume of investment capital attracted by the Uzbek agricultural sector exceeds $400 million. This financial resource is intended for implementing 66 investment projects, of which, as of the end of March 2022, 42 have already been launched (Artykov, 2022). In the context of investment cooperation between Turkish and Uzbek businesses in the field of agricultural production, it is worth noting that a significant part of the volume of products produced or planned for production is intended for export to the Republic of Turkey. For example, one of the joint projects of Turkish and Uzbek businesses is the installation of a drip irrigation system on sesame plantations grown in Uzbekistan, which is later intended for export to Turkey. Considering the above, it is worth noting that Turkish investments in the agricultural complex of Uzbekistan also serve the achievements of Turkey’s geo-economic interests. On the one hand, the level of food security is increasing as agricultural production and logistics channels are being formed in the partner country, which is close not only in economic but also in historical, cultural, and militarypolitical (as was considered earlier) planes. A stable supplier of raw materials for industrial production enterprises, including the food industry, is being formed. Simultaneously, control over the resource component in the supplier country allows Turkey to increase the amount of added value attributable to Turkish economic agents. It should be noted that the investment process often implies construction and engineering works, which, in turn, are also carried out by Turkish companies, which also increases the income of Turkish businesses and supports its technological tone. In the context of the participation of Turkish companies in projects in the agricultural sector, as well as related sectors of the Uzbek economy, we can refer to the following example. The meeting of the Minister of Investment and Foreign Trade of the Republic of Uzbekistan, Sardor Urumzakov, with the delegation of the Turkish company “OYAK,” headed by its CEO Suleiman Savash Erdem, held in February 2022, discussed a wide range of issues related to trade and investment cooperation between the two countries. In particular, the issues of creating a production cluster in the Republic of Uzbekistan specializing in the production of chemicals used in agro-industrial production and chemical reagents used to protect fertile crops, production facilities for the production of melamine and carbon black, and the implementation of joint projects in the automotive industry were touched upon. The prospects of participation of the company “OYAK” in the privatization of state shares in large chemical enterprises of Uzbekistan were also considered (Ministry of Investment and Foreign Trade of the Republic of Uzbekistan, 2022). In addition to the above, it should be noted that the steps taken by Turkey in the field of expanding investment

Geo-Economic Interests of the Republic of Turkey in the Republic of Uzbekistan

cooperation with Uzbekistan also fit into the general idea of the progressive movement of the Turkish leadership towards achieving their geo-economic interests, coupled with geopolitical ones. On the one hand, gaining control over individual enterprises (in the future, sectors) of the Uzbek economy allows Turkish companies to acquire new assets, successfully integrating them into cross-border value chains. On the other hand, the Turkish state, as a single mechanism, can expand the sphere of its economic influence, which, supported by large-scale cooperation in many large spheres, as well as the general cultural and ideological proximity, tends to transform into a cross-border association with the unconditional leadership of the Republic of Turkey. In addition to the issues of trade and investment cooperation between Turkey and Uzbekistan, special attention should be paid to the issues of cooperation in the educational sector. In recent years, the leadership of the Republic of Turkey has shown a special interest in internationalizing higher education and attracting international students. According to the Turkish Higher Education Committee, the number of international students studying in Turkey in the 2013–2014 academic year was 48 thousand; in the 2020–2021 academic year, this figure increased 4.6 times and reached 224 thousand students (Nurdinova, 2022). The state authorities of the Republic of Turkey are taking a wide range of incentive measures to attract many students from abroad, mainly through financial support and scholarship programs. Although scholarship programs aimed at promoting educational immigration have existed in Turkey since the 1960s, a consolidated program regulating the process of attracting international students was formulated only in 1992 (Nurdinova, 2022). The system called the “Great Student Project” was aimed at organizing the process of attracting foreign students, including from Turkic-speaking countries, including Uzbekistan, for the development of human capital. The financing of educational grants for international students in more than 200 Turkish universities is supported by public and private foundations. In the 2020–2021 academic year, almost 2.5 thousand citizens of the Republic of Uzbekistan studied at Turkish universities (Nurdinova, 2022). Negotiations are currently underway between the relevant departments of Turkey and Uzbekistan on the steps taken to open an Uzbek-Turkish university in Uzbekistan with the participation of leading Turkish institutions of higher education. Currently, the Tashkent branch of the University of Economics and Technology of Turkey and the Faculty of the University of Medical Sciences of Turkey, operating based on the Bukhara State Medical Institute, are already functioning in Uzbekistan. Steps taken by the Turkish state authorities to increase the involvement of foreign citizens in the programs of Turkish

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higher education organizations, in addition to purely humanitarian and educational functions, have quite practical goals aimed at forming groups of loyal specialists, mainly in the countries of the Turkic-speaking world, which have the potential to become the so-called soft power. If we turn to issues of geo-economic interests directly, we can say that within the framework of educational processes, stable bindings to production, technological, and organizational practices of specifically Turkish origin are being formed, which can potentially contribute to the promotion of goods, works, or services supplied by the Turkish economic complex to foreign markets. Simultaneously, in the context of issues of geopolitical influence, educational cooperation is one of the most promising long-term tools for the formation of the naturally loyal political, economic, and scientific elite of a country that is an object of geopolitical interest.

4

Conclusion

Speaking about the geo-economic interests of the Republic of Turkey within the framework of its interaction with the Republic of Uzbekistan, two key goals can be identified. The first goal is the formation of a stable channel for the sale of goods, works, and services supplied by the Turkish economy to foreign markets. The second goal is the organization and maintenance of a stable supplier of raw materials and industrial blanks required for the normal functioning of the Turkish industrial complex. With regard to the mechanisms for the implementation of these goals, we can distinguish broad-format cooperation at the level of public authorities focused on comprehensive support for existing and the creation of new trade relations. In this regard, it should be noted that the trade turnover between Turkey and Uzbekistan in monetary terms can be called quite harmonious. However, if we analyze the supplied groups of goods, we can find that the volume of value added in the products of Turkish exports to Uzbekistan significantly exceeds the same indicator for Uzbek exports to Turkey. It is also possible to observe the active penetration of Turkish investment capital into the Uzbek economy, which also contributes to the Turkish-oriented Uzbek economy and allows Turkish businesses to receive additional income from more complete control of cross-border production chains. One of the longterm mechanisms for developing economic relations between Turkey and Uzbekistan is programs to support international students, including those from Uzbekistan, used by Turkish authorities and specialized funds. While receiving education in Turkey, future specialists perceive the established technological and business practices applied in Turkey, thereby increasing the potential likelihood of their contacting Turkish companies as part of their professional activities.

286 Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project № 060121-0-000.

References Aliiev, A. (2022, February 9). From carpets to T-shirts. How Turkish textile brands conquered the world. TRT Russian. Retrieved June 17, 2022, from https://www.trtrussian.com/mnenie/ot-kovrov-dofutbolok-kak-tureckie-tekstilnye-brendy-pokorili-mir-7909591 Artykov, A. (2022, March 31). What does the new stage of UzbekTurkish cooperation look like in numbers? Nuz.uz. Retrieved June 23, 2022, from https://nuz.uz/ekonomika-i-finansy/1239490-kakvyglyadit-novyj-etap-uzbeksko-tureczkogo-sotrudnichestva-vczifrah.html Gazeta.uz. (2022, March 30). Uzbekistan and Turkey to raise the status of relations to “comprehensive strategic partnership”. Retrieved June 12, 2022, from https://www.gazeta.uz/ru/2022/03/30/turkey/ Ministry of Investment and Foreign Trade of the Republic of Uzbekistan. (2022, February 2) New Turkish investors show interest in implementing projects in Uzbekistan. Retrieved June 21, 2022,

I. V. Andronova and I. O. Khabarov from https://mift.uz/ru/news/jangi-turk-investorlari-uzbekistondalojialarni-amalga-oshirishga-iziish-bildirmoda Nurdinova, S. (2022, March 29). Uzbekistan – Turkey: Prospects for trade and economic cooperation. Review.uz. Retrieved June 18, 2022, from https://review.uz/post/uzbekistan-turciyaperspektiv-torgovo-ekonomicheskogo-sotrudnichestva Panfilova, V. (2022, March 29). Uzbekistan and Turkey will be connected by a transport corridor. Nezavisimaya gazeta [independent newspaper]. Retrieved June 11, 2022, from https://www.ng.ru/ cis/2022-03-29/5_8403_uzbekistan.html Review.uz. (2022, March 28). Infographic: Uzbekistan’s trade with Turkey. Retrieved June 23, 2022, from https://review.uz/post/ infografika-ozbekiston-va-turkiya-ortasidagi-savdo-hajmi State Committee of the Republic of Uzbekistan on Statistics. (2021). Foreign trade turnover of the Republic of Uzbekistan; Preliminary data for January–December 2021. Retrieved June 15, 2022, from https://stat.uz/images/uploads/reliz2021/tashqi-savdo_dekabr_ 210122ru.pdf Tolipov, F. (2021, July 21). Uzbekistan-Turkey: Awaiting results from strategic relations. Central Asian Bureau for Analytical Reporting (CABAR.Asia). Retrieved June 21, 2022, from https://cabar.asia/ru/ uzbekistan-turtsiya-v-ozhidanii-rezultatov-ot-strategicheskihvzaimootnoshenij

Rethinking the Potential of the International Transport Corridor “North-South” in Sustaining Russia’s Foreign Trade Egor V. Pak

and Petr O. Korolev

Abstract

The paper aims to critically assess the potential and key problems of the international transport corridor “NorthSouth” (INSTC) given significant changes in global supply chains due to the sanctions of Western countries recently imposed on the Russian Federation. Today, the artery is not fully loaded with mainly bulk cargoes in the front. In its turn, this corridor might sustain the trade flows between Russia (and the Eurasian Economic Union at large) under the FTA framework: an interim EAEU-Iran agreement is already in force, and an EAEU-India agreement is on the agenda. This route has substantial potential given the redirection of trade flows from and to Russia, evident from early 2022. However, this process is subject to several economic and political concessions. Keywords

International transport · International transport corridor · “North-south” · Mutual trade · Multimodal transportation · EAEU

JEL Codes

F02 · F15

E. V. Pak (✉) MGIMO University, Moscow, Russia e-mail: [email protected] P. O. Korolev Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

1

Introduction

The idea of developing an international transport corridor “North-South” was proposed more than two decades ago. Thus, in September 2000, an agreement on the North-South international transport corridor was signed between Russia, Iran, and India (JSC “IC ‘RZD-Invest’”, 2021). Until now, despite relative interstate attention, infrastructural constraints do hamper the development of this artery. For instance, the railway system of Iran is fragmented, which requires reloading on trucks. As of today, given packages of Western sanctions, Russia has been deprived of maritime import flows executed my foreign liner majors (mainly containerized cargo) to its largest port in the Baltic Sea—Saint-Petersburg. In March 2022, the EU banned ships under any flag that had previously entered any Russian seaport to be serviced at any European port and terminals (Golubchik & Pak, 2022). In this regard, these sanctions are generally redirecting commodity flows from and to Russia from the maritime leg in general, as well as from a latitudinal route (ITC “EastWest”) to the meridian route (ITC “North-South”), especially given the active development of trade relations between the EAEU (mainly Russia) with Iran and India. The disclosure of the trade potential of the EAEU, Central Asia, and the countries of the southern part of the North-South corridor is an important prerequisite for its development. For instance, at the meetings of representatives of the Eurasian Economic Commission (EEC) and representatives of the Customs Service of Iran, emphasis has been put on the development of the INSTC as well as the widespread introduction of digital technologies in customs operations and customs control to digitalize its functioning. Russia’s input into the development of the North-South corridor can be broken down into a number of infrastructural initiatives. First, an overhaul of the Olya seaport with the creation of a container terminal—the first cargo area, including the reconstruction of the existing berths No. 8 and

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_50

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No. 9, the creation of four new terminals, and the construction of the second cargo area near the Zaburunny Ilmen lake territory. Second, setting up a supporting network of multimodal freight transport and logistics centers (TLCs) to provide services for domestic and international cargo flows within the related framework of the North-South corridor: TLCs “Bely Rast,” “Vostochny,” and “Khovrino” in the Moscow Region; TLC “Donskoy” in the Rostov Region. Third, at the recent 25th St. Petersburg International Economic Forum (June 15–18, 2022), several statements were made about the construction of an additional railway station Samur-2 on the border of Russia with Azerbaijan, which will increase the cargo capacity of this section of the corridor (Vardomsky & Turaeva, 2018).

2

Materials and Method

Currently, the topic of the development of international transport corridors (which is quite a debatable concept though) is quite relevant. Many research and analytical reports dealing with the key problems and possible potential of the INSTC have been performed. In particular, this topic has been investigated by Golubchik and Pak (2022), Lipatov (2022), Mamaev and Sorokin (2020), Markelov (2022), Pak (2021), Prokofyeva (2020), Titova et al. (2021), Vardomsky and Turaeva (2018). The research is rooted in the following reports: the report made by Eurasian Development Bank “The International Transport Corridor “North-South”: The Creation of the Transport Framework of Eurasia” (Vinokurov et al., 2021), the report by MGIMO Consulting Agency “Eurasian Strategies” Prospects for the Development of the International Transport Corridor “North-South” (Tokarev et al., 2019), the report of JSC “IC ‘RZD-Invest’” “International Transport Corridors” (JSC “IC ‘RZD-Invest’”, 2021). This research has carried out a content analysis of current events that affect the development of the corridor under the framework of the existing sanctions regime.

3

Results

In the context of global economic and political turbulence, for instance, sanctions against the Russian Federation and aftershocks of the COVID-19 crisis, major material flows from and to Russia are being redirected. ITC “North-South” is one of the most promising options for Russia to transfer the flows of goods to India, China, and other Asian countries (the so-called “Shift to the East”), which the country used to ship to and from the EU. The corridor is multimodal and could be broken down into three routes: • Trans-Caspian route—using the Russian seaports of Astrakhan, Olya, and Makhachkala and the ports of Iran—Bandar-e Anzali, Nowshahr, and Amirabad; • The Western route is a direct railway connection through the Samur (Russia)–Yalama (Azerbaijan) border crossings with further access to the Iranian railway network through the Astara (Azerbaijan)-Astara (Iran) border crossing; • The Eastern route is a direct railway connection through Kazakhstan, Uzbekistan, and Turkmenistan with access to the Iranian railway network through the border crossings Sarakhs (Turkmenistan)–Sarakhs (Iran) and Ak-Yayla (Turkmenistan)–Inche Burun (Iran) (JSC “IC ‘RZDInvest’”, 2021). A significant advantage of ITC “North-South” is a tangible reduction in the delivery dates from 4–6 to 2–3 weeks, compared with the usual route from Mumbai to St. Petersburg (lasting for 30–45 days) through the Suez Canal. Moreover, the transportation of goods along the Eastern branch of the corridor passing through Kazakhstan and Turkmenistan reduces the delivery time to 15–18 days. One of the key factors in the development of the corridor is the active interaction of the EAEU countries (mainly Russia) with Iran, India, and other countries of the region. Since the signing of the FTA agreement with Iran (2018), as of 2021, exports and imports between the EAEU countries and Iran have increased from $1.8 to $3.4 billion and from $0.9 to $1.6 billion, respectively. Also, in the structure of Iran’s foreign trade, the EAEU ranks third with $4.9 billion (10% of Iran’s foreign trade turnover) (Table 1) (Eurasian Economic Commission (EEC), 2022b).

Table 1 The EAEU’s bilateral trade with Iran Exports ($ billion) Imports ($ billion) Trade turnover ($ billion) Growth rate of trade turnover (%) Russian exports ($ billion) Share of Russian exports (%)

2017 2.0 0.7 2.7 0 0.7 35

2018 1.8 0.9 2.7 0 1.3 75

2019 1.6 0.8 2.4 -11 1.2 73

2020 1.7 1.2 2.9 7 1.0 61

Source: Compiled by the authors based on Eurasian Economic Commission (2022c) and International Trade Centre (2022)

2021 3.4 1.6 5.0 85 N/A N/A

Rethinking the Potential of the International Transport Corridor “North-South&r##

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Table 2 The EAEU’s bilateral trade with India Exports ($ billion) Imports ($ billion) Trade turnover ($ billion) Growth rate of trade turnover (%) Russian exports ($ billion) Share of Russian exports (%)

2017 7.5 3.3 10.8 0 6.5 87

2018 9.0 3.7 12.7 18 6.8 76

2019 9.3 4.6 13.9 29 6.2 67

2020 8.3 4.1 12.4 15 5.9 72

2021 11.3 5.1 16.4 52 8.7 77

Source: Compiled by the authors based on Eurasian Economic Commission (2022c) and International Trade Centre (2022)

As for India, the foreign trade turnover in 2020–2021 increased by 31.7% (from $12.4 to $16.4 billion). India is ranked 13th in the structure of the EEC’s foreign trade (1.9%). The EAEU is ranked 16th in India’s list of foreign trade partners, leveled at $17.0 billion (1.8%) (Eurasian Economic Commission (EEC), 2022a). As it is shown in Tables 1 and 2, mutual trade between the EAEU and Iran has a lower growth rate compared to that in the Indian case. However, in 2017–2021 there was a significant increase of 85% in EAEU-Iran mutual trade. Since 2017, the share of Russia’s exports out of the total exports of the EAEU to these destinations has increased and exceeded 70%. It is worth noting that there are no statistics on Russia’s exports to Iran for 2021, but it can be assumed that there will also be an increase because the EAEU exports to Iran increased almost two times in 2020–2021 (from $1.7 to $3.4 billion). At the beginning of 2022, following the meeting between the Minister for Trade of the EEC and the Ambassador Extraordinary and Plenipotentiary of the Republic of India, the first round of negotiations on the creation of an EAEU-India FTA was announced. During the negotiations, it was stressed that the North-South corridor played an important role in the development of trade relations between the EAEU and India. It should also be noted that India has been actively increasing oil supplies from Russia by more than 50 times since the beginning of 2022 (Manukov, 2022). In their turn, crude oil and petroleum products are the main commodity items in the exports of Russia to India in 2020–2021. The imports increased from $2.2 billion to $2.5 billion (+14.1%) and from $177 to $764 million (+431%) (Eurasian Economic Commission (EEC), 2022a). In general, the development of connectivity between the EAEU countries and the countries of South Asia and the Persian Gulf might be sustained by the conjunction of ITCs “East-West” and “North-South.” According to the Eurasian Development Bank (EDB), should it succeed, the trade volumes via these routes may range from 325 to 662 thousand TEU by 2030 (from 6.0 to 11.7 million tons), including that from 127 to 246 thousand TEU (from 2.3 to 4.4 million tons) via the “East-West” corridor only (Tokarev et al., 2019). The main contribution to the potential volume of container traffic

is to be made by the cargo flows between the EAEU with Azerbaijan, Iran, and India. In this essence, one of the goals set by the EAEU member countries, Iran and India, is to ensure seamless flows via the INSTC, which could be achieved by introducing digital technologies. To implement digitalization in this area, it is planned, however, subject to further negotiations, to carry out several actions, i.e.: • Create digital counterparts of transport infrastructure facilities; • Apply e-TIR Carnets; • Introduce electronic road waybills—e-CMR; • Create a cloud ecosystem of integrated logistics; • Implement a control and monitoring system using electronic navigation seals; • Use intelligent transport systems; • Move to the railway communication system according to the 5G standard; • Introduce autonomous driving and uncrewed vehicles. Moreover, according to the econometric model built by the EDB, the digitalization of the INSTC has a positive and statistically significant effect on increasing the volume of foreign trade of the parties concerned. Additionally, it contributes to making the logistics process safer and more transparent, leading to the reduction of the share of the shadow market. Besides, the issue of combating climate change, which is one of the main UN Sustainable Development Goals, is also acute. In this regard, the EDB anticipates that greater use of the corridor might result in the reduction of emissions of greenhouse gases, i.e., particulate matter and nitrogen oxides. In fact, railway transport is second to none in this sense compared to other modes of transport (air, water, and motor transport). As such, emissions from railway transport on average do amount to 18 g/t*km in comparison to air— 544 g/t*km, maritime—12 g/t* km, and road—121 g/t*km. Thus, the use of INSTC with its predominant rail and sea options might also positively affect the environment due to lower emissions of harmful substances (Vinokurov et al., 2021).

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Simultaneously, there are some constraining factors that hinder the development of the North-South corridor, including the following: • Economic (i.e., consequences of the economic crisis caused by the COVID-19 pandemic, increasing freight rates due to disruptions of supply chains, and changes in the conjuncture of international commodity markets); • Infrastructural (i.e., different railway gauges; bottlenecks on certain sections of the corridor); • Institutional (i.e., trade barriers and several regulative systems on various modes of transport); • Geostrategic (i.e., imposition of sanctions and various territorial conflicts). Nevertheless, by actively attracting investments in infrastructure development from all parties concerned and conducting active negotiations, for example, on concluding an FTA between the EAEU and India, Russia may reposition itself in global supply chains.

4

Conclusion

The events of the first half of 2022, which affected the world economy, have forced Russia to refocus on interaction with other partners searching for new transport routes, given the economic sanctions imposed by the West. In this regard, the development of the INSTC is becoming a priority for Russia (and EAEU countries to some extent), India, and Iran. The key advantages of this route are shorter delivery dates and cost of delivery than that via the Suez Canal. However, the corridor has several durable infrastructural constraints. Nonetheless, the authors believe that the introduction of digital technologies into the logistics process might create seamless and transparent delivery options. However, it might require meeting each other halfway. Acknowledgments This publication has been supported by the RUDN University Scientific Projects Grant System, project № 060121-0-000.

References Eurasian Economic Commission (EEC). (2022a). The EAEU’s foreign trade with India according to the results of 2021. Retrieved June 20, 2022, from https://eec.eaeunion.org/upload/medialibrary/317/ EAES_Indiya.pdf

Eurasian Economic Commission (EEC). (2022b). The EAEU’s foreign trade with Iran according to the results of 2021. Retrieved June 20, 2022, from https://eec.eaeunion.org/upload/medialibrary/57a/ EAES_Iran.pdf Eurasian Economic Commission (EEC). (2022c). Tariff and non-tariff customs regulation department. Retrieved June 30, 2022, from http://www.eurasiancommission.org/ru/act/trade/catr/Pages/default. aspx Golubchik, A. M., & Pak, E. V. (2022). Economic sanctions against Russia: A transport perspective. Russian Foreign Economic Bulletin, 3, 50–58. https://doi.org/10.24412/2072-8042-2022-3-50-58 International Trade Centre (ITC). (2022). Trade map. Retrieved June 30, 2022, from https://www.trademap.org/Index.aspx JSC “IC ‘RZD-Invest’”. (2021). ITC: International transport corridors [Report]. Retrieved June 20, 2022, from https://railwayforum.ru/ u p l o a d / i b l o c k / b 1 3 / А н а л и т и к а _ МеждународныеТранспортныеКоридоры_РЖД-Инвест.pdf Lipatov, A. G. (2022). The system of international transport corridors, the current state, and prospects of development. Modern Economy Success, 2, 31–37. Mamaev, E. A., & Sorokin, D. V. (2020). To assess the development potential of the “north-south” international transport corridor. Journal of Transsib Railway Studies, 3(43), 86–96. Manukov, S. (2022, June 30). In Asia, the appetite for Russian oil has sharply increased. Magazine “Expert”. Retrieved June 30, 2022, from https://expert.ru/2022/06/30/neft-rossiya/ Markelov, K. A. (2022). History and contemporary state of development of the international north-south transport corridor. The Caspian Region: Politics, Economics, Culture, 1(70), 98–109. https://doi. org/10.54398/1818-510X_2022_1_98 Pak, E. V. (2021). Transport and logistics in the EAEU. In N. A. Piskulova (Ed.), The economic dimension of Eurasian integration. Palgrave Macmillan. https://doi.org/10.1007/978-3-030-59886-0_6 Prokofyeva, T. A. (2020). The development of the logistics infrastructure of Euro-Asian MTKs is a strategic direction for the implementation of the transit potential and intensive economic growth of the regions of Russia. In the Center of the Economy, 1, 1–12. https://doi. org/10.24411/2713-2242-2020-00002 Titova, S. S., Makurina, V. M., Karpova, A. I., & Smolyaninov, A. V. (2021). Scientific basis of creation and operation of international transport corridors in Russia. International Journal of Advanced Studies, 11(2), 21–35. https://doi.org/10.12731/2227-930X-202111-2-21-35 Tokarev, A., Margoev, A. & Silaev, N. (2019, August 30). Prospects for the development of the international transport corridor “NorthSouth.” MGIMO Consulting. Retrieved June 26, 2022, from http:// eurasian-strategies.ru/wp-content/uploads/2019/08/Sever-Jug-1.pdf Vardomsky, L. B., & Turaeva M. O. (2018). Development of the postSoviet transport corridors in terms of contemporary geopolitical and economic challenges (scientific report). Institute of Economics of the Russian Academy of Sciences. Retrieved June 26, 2022, from https://inecon.org/docs/2018/Vardomsky_Turaeva_paper_2018.pdf Vinokurov, E., Akhunbayev, A., Shashkenov, M., & Zaboev, A. (2021). The international north–south transport corridor: Promoting Eurasia’s intra- and transcontinental connectivity. Eurasian Development Bank. Retrieved June 26, 2022, from https://vinokurov.info/ wp-content/uploads/2021/12/edb_2021_report-5_instc_eng.pdf

Prospects of the Khorgos Free Economic Zone Diana M. Madiyarova

and Wang Yong

Abstract

The territory of the post-Soviet republics of the Central Asian region is the easiest and often the only economically viable way to connect suppliers and consumers in China and Europe by land routes. Simultaneously, Khorgos is the central gate, in the vicinity of which the multidirectional flows of goods physically meet and cross the borders of China and the outside world. The development of multimodal transport corridors is also beneficial for the Republic of Kazakhstan because it helps attract investment, develop infrastructure, and create new jobs. A unique international center for cross-border cooperation has been created in Khorgos, where sellers and buyers from China and Central Asian countries can conduct transactions through direct personal communication without special consular permits to visit a neighboring state. This research aims to present the background results on creating the Khorgos Free Economic Zone and analyze its economic development status, including a synthesis analysis that helps to highlight the risks and prospects for the development of this zone. Keywords

Eastern gate · China · Khorgos free economic zone · Kazakhstan · “One Belt · One Road” strategy · Transit corridor

JEL Codes

F15 · F23 · F63

D. M. Madiyarova (✉) · W. Yong Peosples’ Friendship University of Russia (RUDN University), Moscow, Russia

1

Introduction

Economic, social, and political regional cooperation allows countries to function successfully in the context of globalization. One of the areas of global cooperation is the megainitiative “Belt and Road” developed by the People’s Republic of China. This initiative involves solving the most important geopolitical and geo-economic tasks. The People’s Republic of China needs to increase trade turnover with Western Europe, the Middle East, and the Persian Gulf countries. However, in this case, sea transportation is timeconsuming. An alternative solution is land transportation through the Republic of Kazakhstan, in other words, through the Khorgos Free Economic Zone (Khorgos FEZ).

2

Methodology

The methodology used to study the prospects of the Khorgos FEZ includes a structural analysis that allows us to assess the state of the Khorgos FEZ and evaluate the risks and benefits of its development and the prospects for existence. The study employs qualitative and quantitative methods of analysis. This study relied on the official website of Khorgos and the analytical works of researchers as the primary data source.

3

Results and Discussion

3.1

History of the Khorgos Free Economic Zone

Border trade between China and the neighboring countries has been established along the Great Silk Road since the depth of unrecorded time. Chinese authorities have begun stimulating cross-border trade development since the 1990s

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_51

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to revive the Silk Road. China actively supports such development to intensify trade and expand the export potential of border areas with neighboring countries. Kazakhstan-Chinese relations have undergone three stages that helped them strengthen (Development Strategy of Special Economic Zone “International Center for Border Cooperation ‘Khorgos’” for 2020–2022, 2022, p. 10). The first stage was from 1991 to April 1996. This period is characterized by the development of bilateral ties. The countries established relations in the field of foreign policy, which developed through diplomatic relations and mutual visits at a high government level. Economic cooperation was steadily growing in trade, security, and other areas related to the prohibition of using nuclear weapons. The second stage began in Shanghai when China signed (April 1996) the “Agreement on confidence building in the military field in the border area” with four countries—Russia, Kazakhstan, Tajikistan, and Kyrgyzstan. Thus, KazakhstanChinese relations entered a new period of parallel and correlative development of bilateral and multilateral relations. Interstate relations meant providing guarantees for strengthening cooperation. In the third stage, since July 2005, Kazakhstan-Chinese relations have reached a new level, known as a strategic partnership. During this period, the mutual ties between the two countries have significantly deepened. Investment and technological cooperation have become one of the most promising areas for developing trade relations between Kazakhstan and China. Considering such ties, in 2002, the President of the Republic of Kazakhstan, Nursultan Nazarbayev, took the initiative to create an International Centre for Border Cooperation “Khorgos” (ICBC “Khorgos”), consisting of Kazakhstani and Chinese parts. In 2004, two countries signed a framework agreement, and in 2005—an Intergovernmental Agreement (Khorgos International Center for Border Cooperation, n.d.). Since 2013, the development of Khorgos has been taking place within the framework of the “One Belt, One Road” strategy (RIA News Agency, 2017). Since then, Kazakhstan has become an important logistics center of Eurasia. The importance of Khorgos in the movement of goods is comparable to the Suez Canal. Currently, the ICBC “Khorgos” is a free economic zone consisting of the Chinese and Kazakhstani parts. The total area of the zone is 560 hectares (Kulanda, 2019, pp. 100–101), 343 hectares of which belong to China (Khorgos International Center for Border Cooperation, n.d.). Holders of Kazakhstani passports and citizens of China can access this zone. However, they can leave their territory only in the direction of their own countries. Given that Khorgos has numerous commercial, storage, and industrial facilities and even the possibility of accommodation,

D. M. Madiyarova and W. Yong

commercial relations between the representatives of two or more neighboring countries can be built directly without burdening them with unnecessary bureaucratic procedures. Khorgos is a focal point in establishing mutually beneficial links between the people and economies of the respective countries. Since Khorgos is located in the southeast of Kazakhstan, it is also called the Eastern Gate. The Khorgos FEZ is close to the international highway “Western Europe—Western China,” which is the Eurasian transcontinental bridge connecting China and Southeast Asia with the countries of Central Asia, the Caspian Sea, and Europe. The territory of the “ICBC Khorgos” free economic zone (FEZ) includes the checkpoint “Nur-Zholy.” Near the FEZ, there are Altynkol railway station and the Khorgos-Altynkol railway line, which is the second Chinese through traffic road and a continuation of the new Eurasian continental bridge Lianyungang—Alashankou—Kazakhstan (Almaty)— Rotterdam (Netherlands), put into operation 20 years ago (Development Strategy of Special Economic Zone “International Center for Border Cooperation ‘Khorgos’” for 2020–2022, 2022). The total cost of the Kazakhstani part of the “ICBC Khorgos” project is 522.7 billion KZT, of which 108.4 billion KZT are state funds and 414.3 billion KZT are private funds (Syubebayeva, 2016, pp. 133–136). The infrastructure of the Chinese part of the project is entirely ready.

3.2

Economic Status of FEZ Khorgos

The 2004 “Agreement between the Government of the People’s Republic of China and the Government of the Republic of Kazakhstan on the management of the Khorgos International Center for Border Cooperation” describes that the construction of the Khorgos International Center for Border Cooperation aims to “improve the business and investment environment, promote the development of bilateral trade, and meet the different market needs of both sides.” The “ICBC Khorgos” functions to promote the development of cross-border trade, especially in the context of crossborder solid trade and trade structure, where household appliances have become the primary export commodities. The functions of Khorgos FEZ include the presentation and sale of goods, trade negotiations, warehousing and transportation, hotels and restaurants, financial services, commercial service facilities, various regional international economic and trade negotiations, and others. The primary function should be “the presentation and sale of goods” (Fig. 1), gradual improvement of the commodity trading environment in the region, improvement of the level of commercial services, focus on the successful implementation of the function of

Prospects of the Khorgos Free Economic Zone

293 Financial services

Fig. 1 Main functions of Khorgos FEZ. Source: Compiled by the authors based on Development Strategy of Special Economic Zone “International Centre for Border Cooperation ‘Khorgos’” for 2020–2022 (2022)

Infrastructure of commercial services

Organization of various regional and international conferences on the economy, trade, and other subjects

presenting goods and sales, and the promotion of other functions. According to Chinese customs statistics, the volume of trade between China and Kazakhstan through the Khorgos FEZ checkpoint continues to grow. Due to the impact of the global pandemic, bilateral trade between China and Kazakhstan in 2020 reduced by 2.6% but import trade from Kazakhstan increased by 4.9% (Table 1) (Office of Business Advisor of the Embassy of China in Kazakhstan. ChineseKazakhstan cooperation, 2022). In 2021, the volume of import and export cargo of Khorgos FEZ port will be 39.6 million tons, and the trade volume will be $44.57 billion, which is 15.1% and 17% more than last year. Khorgos FEZ will promote the development of bilateral trade, directly developing China’s trade with Kazakhstan and actively promoting the importance of the cooperation center (China News Service, 2022). Raw materials traditionally account for the leading share in the structure of Kazakhstani exports. From 2011 to 2016, oil was the main commodity for sale to China. From 2017 to 2018, the demand for it decreased, and copper took the first line. In 2019, the leading share of exports to China occupied oil, copper, and ores; the leading share of imports was machinery and equipment, electrical appliances, iron, and steel products. An essential share in exports to China is agricultural products. Meat and dairy products, vegetable oils and fats, salt, foodstuffs, and other goods are also supplied to China. Imports from China are much more diversified. These are electronic equipment, building materials, electrical equipment, pipes, vehicles and spare parts, construction equipment, clothing, and other products— more than 800 items in total (Development Strategy of Special Economic Zone “International Center for Border Cooperation ‘Khorgos’” for 2020–2022, 2022, p. 8).

Trade negotiations

Presentation and sale of goods

Warehousing and transportation

Hotels and restaurants

It confirms the intensive international trade between the two countries. Moreover, cross-border goods to other countries also pass through Khorgos FEZ, increasing the logistics flow. About six million containers run annually between the countries of the European Union and the Asia-Pacific region. Nowadays, the majority of this flow (98%) is transported by a foreign navy through foreign ports, bypassing the territory of Kazakhstan. Simultaneously, the transit route from the AsiaPacific region to Europe through Kazakhstan is much shorter than the sea route. The main competitive advantage of Kazakhstan is a faster, ceteris paribus cargo delivery time. This circumstance allows predicting the inevitable growth of cargo flows in the direction of China—Europe and transit through Kazakhstan (Izteleuova et al., 2017, pp. 318–321). Besides, Khorgos FEZ is attractive to consumers not only as an economic but also as a tourist attraction (Fig. 2). Every day, one visitor to the FEZ Khorgos can take out duty-free goods worth 8000 yuan (RMB) (Izteleuova et al., 2018). The Kazakhstani side offers residents of the zone tax benefits (zero rates for several taxes), exemption from customs duties, and VAT refunds generated during the construction of buildings and facilities (Khorgos International Center for Border Cooperation, n.d.). According to the People’s Bank of China, the highest one-day cash inflow in tenge (KZT) to Chinese stores in Khorgos FEZ is about $200 million, equal to about 3.84 million RMB. The policy of free exchange of currency has deepened financial cooperation between China and Kazakhstan and contributed to the diversification of trade and investment between China and Kazakhstan (Li & Li, 2019, p. 24). The first cross-border cash transaction in tenge in the Khorgos FEZ was successfully completed in March 2018 to

Table 1 The volume of trade between China and Kazakhstan from 2017 to 2021 Year 2017 2018 2019 2020 2021

Bilateral trade volume ($100 million) 180 198.85 219.9 214.3 252.5

Year-onyear growth +37.4% +10.47% +10.6% -2.6% +17.6%

Exports of China to Kazakhstan ($100 million) 116.4 113.5 127.3 117.1 139.8

Year-onyear growth +40.4% -2.52% +12.1% -8% +19.5%

Imports of China to Kazakhstan ($100 million) 63.3 85.35 92.6 97.2 112.7

Year-onyear growth +32.3% +34.26% +8.6% +4.9% +15.3%

Source: Compiled by the authors based on the data provided by the Office of the Business Advisor of the Chinese Embassy in Kazakhstan (2022)

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Thousand people 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0

Data left for Kazakhstan Data right for China

2015 510 1830

2016 671 2518

2017 1134 2784

2018 1222 2917

2019 1210 3245

2020 1288 3396

2021 1855 4668

2022 2319 5575

2023 2551 7433

2024 2806 8032

2025 2946 9353

Fig. 2 Actual and forecast tourist flows of “ICBC Khorgos,” thousand people. Source: Compiled by the authors based on Development Strategy of Special Economic Zone “International Centre for Border Cooperation ‘Khorgos’” for 2020–2022 (2022)

standardize the management of foreign currency funds, promote financial cooperation between China and Kazakhstan, and open a channel for the return of cash in tenge. Specific methods include the following: • Using the geographical advantages of the Khorgos FEZ, the Agricultural Bank of China will transport the exchanged cash in tenge to the Khorgos FEZ and deliver it locally jointly with the commercial banks of Kazakhstan to Khorgos FEZ; • The funds are liquidated through bank clearing by the mutual opening of bank accounts (Li & Li, 2019, p. 24). Thus, the “Khorgos—Eastern Gate” FEZ is a point of growth in transit and cargo flows through the territory of Kazakhstan. The formation of an effective transport and logistics system should include the creation of advanced transport infrastructure, the development of industrial and logistics zones, the construction of an inexpensive and fast distribution system, and the provision of logistics services when servicing cargo flows in the transport corridor and adjacent regions (China News Service, 2022, pp. 318–321). Moreover, enterprises in the Khorgos FEZ conduct foreign exchange transactions such as trade, cross-border investment, and financing. Free currency exchange operations can reduce the company’s settlement costs and increase efficiency. Simultaneously, foreign currency products of the exchange trading center can help enterprises effectively avoid foreign exchange risks.

3.3

The Development Advantages and Prospects of Khorgos FEZ

One of the areas of global cooperation is the creation of free economic zones that attract investments. Cross-border free economic zones, like the Khorgos FES, have a significant multiplier effect.

The Khorgos FEZ allows the People’s Republic of China to connect suppliers and consumers in China and Europe by land routes and implement the Belt and Road mega-initiative. Khorgos FEZ is the central gate in the vicinity of which the multidirectional flows of goods physically meet and cross the borders between China and the outside world. The creation of “ICBC Khorgos” was initiated in 2002 by the President of the Republic of Kazakhstan, Nursultan Nazarbayev. Since 2013, Khorgos has been developing as part of the “One Belt, One Road” strategy. Currently, the “ICBC Khorgos” is a free economic zone consisting of the Chinese and Kazakhstani parts. In the “ICBC Khorgos,” the representatives of two or more neighboring countries can build commercial relations directly without being burdened with unnecessary bureaucratic procedures. According to the “China-Kazakhstan Khorgos International Border Cooperation Center Related Issues” signed by China and Kazakhstan in 2020, any enterprise can waive customs duties, and some imported goods are exempt from import duties, regardless of whether these goods originate from their own country. In the structure of imports and exports of China and Kazakhstan, China is a major producing country, while Kazakhstan mainly exports energy and ores. Thus, the complementarity of trade between China and Kazakhstan is especially strong. China and the countries of Central Asia are developing countries with huge trade potential. Khorgos FEZ is in a favorable geographical position for re-export trade. It can also export to the European market through the Central European Bank and become an international free trade center. The strategic program for developing the special economic zone “ICBC Khorgos” for 2020–2022 provides target indicators for the volume of production of goods and services in the FEZ for $54–71 billion. However, due to COVID-19, administrative restrictions, and an insufficient number of centers of attraction in the territory of the FEZ, the actual turnover is only a third of the target indicators.

Prospects of the Khorgos Free Economic Zone

In 2021, the number of incoming and outgoing China-EU trains at Khorgos Port exceeded 6000. Under the Belt and Road Initiative, China-EU trains were expected to connect 22 European countries and 45 cities. Overall, the railway line is the safest, most economical, and most convenient channel for China to open up to the outside world and build a logistics economic corridor (National Development and Reform Commission of the People’s Republic of China, 2022). The territory of the post-Soviet republics of the Central Asian region is the easiest and often the only economically viable way to connect suppliers and consumers in China and Europe by land routes. Khorgos is the central gate, in the vicinity of which the multidirectional flows of goods physically meet and cross the border of China and the outside world. The development of multimodal transport corridors is also beneficial for the Republic of Kazakhstan because it helps attract investment, develop infrastructure, and create new jobs. A unique international center for cross-border cooperation has been created in Khorgos FEZ, where sellers and buyers from China and Central Asian countries can conduct transactions through direct personal communication without needing special consular permits to visit a neighboring country. Financial Services in the Khorgos FEZ have increased cross-border settlement in RMB, established a payment and clearing system, lowered economic transaction costs, expanded the scale of RMB funds, accelerated offshore RMB liquidity, and created an international foreign exchange trading center (The State Council of The People’s Republic of China, 2021). For the effective functioning of bordering FEZs, each participating country should contribute to creating advanced infrastructure, integrated industrial and logistics zones, logistics services, preferential tax and customs regimes, attractive investment regimes, and rational and flexible regulation and management. Several constraining factors seize the development of the Khorgos FEZ like: (a) Legislative and restrictive barriers (e.g., the restriction of norms on the frequency of movement of goods exempt from customs duties by individuals across the customs border and the limited operation of the “ICBC Khorgos”); (b) Lack of anchor projects (for instance, there is a plan to create a Kazakhstani-Chinese university, a golf club, a concert hall, a passport and visa service, and an amusement park as anchor projects); (c) Lack of tourists attracted to the Khorgos FEZ (one of the solutions can be the investment and creation of the anchor projects).

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To increase the efficiency of the “ICBC Khorgos,” the participating countries should also develop a unified technological process that considers the interaction between the Altynkol railway station, the dry port of Khorgos, and the ICBC “Khorgos—Eastern Gates” FEZ (Izteleuova, 2016, pp. 139–142). They should ensure technological development and normalization of all technical processes and establish the integration between production, transport, and consumption. It will help reduce transport and logistics costs and ensure just-in-time delivery of goods (Izteleuova et al., 2020, pp. 155–163). Transportation should be organized based on a single bill of lading. The processing of documents should be conducted in the “one-stop shop” mode. This will make it possible to use simplified trade procedures and reduce non-tariff trade barriers (China News Service, 2022, pp. 318–321). Besides, it is recommended to simplify customs clearance procedures and reduce container processing time (Izteleuova et al., 2018, pp. 161–167). In addition to the organizational and technological aspects of the activity of the Khorgos FEZ, it is also relevant to regulate the zone’s activity on the Kazakhstani and Chinese sides, respectively. Despite considerable experience in developing special economic zones, China still does not have a single legislative act regulating the activities (Development Strategy of Special Economic Zone “International Center for Border Cooperation ‘Khorgos’” for 2020–2022, 2022). Guo Qingxiang suggests creating a financial stability supervision and coordination mechanism for Khorgos based on a “double incentive”: standardized development and financial innovation (Guo, 2016, pp. 44–47). The intensification of the region’s development attracts new economic entities, which is inevitably associated with increased risks. For instance, Wu Zongrui raises the problems of reducing financial, credit, investment, market, and other risks (Wu, 2016, pp. 64–67). Overall, the problem with the internationalization of the RMB is highly relevant to China. Thus, the development of the “ICBC Khorgos” within the framework of the “One Belt, One Road” strategy contributes to solving this issue (Huang, 2020, pp. 132–134).

4

Conclusion

Globalization promotes the cooperation of countries. The created Khorgos FEZ currently attracts investments and provides a significant multiplier effect. For the effective functioning of cross-border free economic zones, each participating country needs to create and ensure appropriate mechanisms and tools: advanced infrastructure, integrated industrial and logistics zones, logistics services, financial services, preferential tax and customs

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regimes, attractive investment regimes, rational and flexible regulation and management. Nowadays, Khorgos FEZ is actively developing and, in the future, has all the possibilities to become an international center of free trade and finance in Central Asia.

References China News Service. (2022, May 1). 2021 Xinjiang Khorgos import and export freight traffic and trade to achieve the dual brightness. Retrieved April 15, 2022, from https://www.chinanews.com.cn/cj/ 2022/01-22/9659076.shtml Development Strategy of Special Economic Zone “International Center for Border Cooperation ‘Khorgos’” for 2020–2022. (2022). Retrieved April 3, 2022, from https://khorgos.kz/wp-content/ uploads/2020/11/strategiya-sez-mczps-horgos-2020-2022.pdf Guo, Q. (2016). The idea of establishing a financial stability supervision and coordination mechanism for the Khorgos free economic zone. Western Finance, 12, 44–47. Huang, Y. (2020). Or a study of financial cooperation between China and Kazakhstan in the context of the one belt, one road initiative. Economic Vision, 10, 132–134. Izteleuova, M. S. (2016). On the process of development of interaction technologies of Altynkol station, Khorgos dry port, and FEZ “Khorgos – Eastern gate” ICTS. Bulletin of the Kazakh Academy of Transport and Communications named after M. Tynyshpayev, 3(98), 139–142. Izteleuova, M. S., Shamieva, A. K., & Mukasaliev, A. A. (2017). Development of logistics infrastructure of ICBC “Khorgos” as an element of the international corridor “Western Europe – Western China”. In B. M. Ibraev (Ed.), Collection of XLI international scientific and practical conference “innovative technologies in transport: Education, science, practice” (pp. 318–321). Kazakh Academy of Transport and Communications named after M. Tynyshpayev. Izteleuova, M. S., Igembaev, N. K., & Bekbaulov, D. I. (2018). Customs technologies in activity dry port Ktze-Khorgos gateway. Bulletin of the Kazakh Academy of Transport and Communications named after I. Tynyshpayev, 4(107), 161–167.

D. M. Madiyarova and W. Yong Izteleuova, M. S., Tulendiev, E. E., Akhmetzhanova, A. H., & Zhanbirov, J. G. (2020). On the question about developing technology communication between Altinkol railway station, dry port Khorgos, and International Center for Cross-border Cooperation Khorgos-Eastern Gates. Bulletin of Kazakh Academy of Transport and Communications named after M. Tynyshpayev, 3(114), 155–163. Khorgos International Center for Border Cooperation. (n.d.). Official website. Retrieved April 3, 2022, from https://khorgos.kz/ Kulanda, C. (2019). Prospects for the development of trade cooperation between China and Kazakhstan in the free economic zone “Khorgos”. In V. V. Shcherbakov & E. A. Smirnova (Eds.), Collection of scientific papers “logistics and supply chain management” (pp. 100–101). St. Petersburg State University of Economics. Li, W., & Li, H. (2019). Exploring the China-Kazakhstan Khorgos center for international border cooperation’s way to promote the internationalization of the yuan. Journal of Financial Economics, 10, 24. National Development and Reform Commission of the People’s Republic of China. (2022, March 29). Khorgos Economic Development Zone held a press conference on preferential policies. Retrieved April 20, 2022, from www.ndrc.gov.cn/xwdt/ztzl/kfqgzlfz/202203/ t20220329_1320751.html Office of Business Advisor of the Embassy of China in Kazakhstan. Chinese-Kazakhstan Cooperation. (2022). Retrieved April 15, 2022, from http://kz.mofcom.gov.cn/article/zhhz/ RIA News Agency. (2017, May 14). “One belt, one road” strategy. Retrieved April 3, 2022, from https://ria.ru/20170514/1494097368. html Syubebayeva, Z. K. (2016). Influence of FEZ “Khorgos – Eastern gate” on the development of commodity movement of the region and economy. In Collection of VII international scientific and practical conference: Management of modern organizations: Experience, problems, and prospects (pp. 133–136). Azbuka. The State Council of The People’s Republic of China. (2021, December 14). The number of China-Europe freight trains entering and leaving the Khorgos port this year has exceeded 6,000. Retrieved April 20, 2022, from http://www.gov.cn/xinwen/2021-12/14/content_ 5660708.htm Wu, Z. (2016). Analysis of RMB construction of Khorgos offshore financial center. Cooperative Economy and Technology, 2016, 64–67.

Part II Applied Aspects of Risk Management in Support of Sustainable Development

Philosophy of System Sustainable Development of Economic Systems from the Position of the Noospheric Approach Anastasia A. Sozinova , Nadezhda K. Savelyeva Shvachkina , and Valentina I. Rodionova

Abstract

Purpose: Formulation and substantiation of the general vision and philosophy of the provision of the complex sustainable development of economic systems, which is based on the principles of the noospheric approach, which allows identifying the role of business in achieving the Sustainable Development Goals and determining the basic conditions of the influence on it. Design/methodology/approach: The methodological framework of the research is presented by a wide interdisciplinary approach, which covers the entire range of the economic, environmental and social sciences, united by a common view of the rational interaction between humans and the environment by the principles of sustainable development and harmonious co-existence within the noosphere. We use a systematic approach—as an applied approach—which considers all types of such interaction from the position of open business systems, which use the environment as one of the production factors (resources, energy, etc.), but, implementing their strategic goals, facilitate the achievement of the UN SDGs. Findings: It is revealed that the concept of sustainable development is the most important tool for the provision of the rational interaction between humanity and nature. Its institutional provision is characterised. The key provisions of the noospheric approach are considered, and emphasis is made on the importance of science, knowledge and education for implementing the ideas of the approach. Special emphasis is made on the role of the system in the process of implementing the concept of sustainable development. From the position of the subject-object structure of the studied processes, we A. A. Sozinova (✉) · N. K. Savelyeva Vyatka State University, Kirov, Russia e-mail: [email protected]; [email protected] L. A. Shvachkina · V. I. Rodionova Institute of Service and Entrepreneurship (Branch) Don State Technical University in Shakhty, Rostov Region, Shakhty, Russia

, Lyudmila A.

identify the important role of economic systems in nature use. We propose a scheme, which reflects the impact of the concept of sustainable development and the noospheric approach on economic systems. We also substantiate the possibility to use the digital economy as a global platform to create a bank of knowledge and its exchange. Originality/value: We propose a scheme which demonstrates the character of the influence of the concept of sustainable development and the noospheric approach on the economic systems’ activities and substantiate the possibility to use innovative solutions and specifics of the digital economy to achieve the Sustainable Development Goals from the position of the noospheric approach. Keywords

Philosophical concept · Nature use · Sustainable development · Economic system · Noosphere · Noospheric approach

JEL Codes

F01 · F29 · F43 · O13

1

Introduction

The development of economic systems takes place in the context of other events, which determine the character of the process and influence of results of activities. As of now, one of the most important features of the economy is the presence of stable environmental and socio-economic limitations of the objective and subjective character. Objective limitations are primarily connected with the complication of resources’ supply chains and their limited stock; subjective—with the presence of regulatory norms in the sphere of nature use and social and economic relations.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_52

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Almost all mentioned limitations have a retrospective basis and are a result of the economic systems’ evolution. Since ancient times, the basis of the economic activities of human civilisation has been the interaction with nature. In the initial stages, such interaction was characterised by insignificant influence on the environment and was not conscious. However, humans used natural resources to satisfy their natural needs. In process of the economic relations, during the First and Second Industrial Revolutions, the influence of humans on the environment became conscious. As of now, human activities change the structure of the hydrosphere, atmosphere and biosphere and makes thermal and noise pollution of nature. Such actions are accompanied by the change in the lithosphere’s structure due to the extraction of mineral resources and the transformation of the ecosystem and species composition of living organisms. In many cases, the anthropotechnical processes become uncontrolled. In this context, implementation of the norms that regulate nature use as a natural reaction that allowed initiating a range of rational processes that are aimed at the formation of a wellbalanced interaction between humans and nature. These processes acquired a global scale and became institutionalised in the form of the sustainable development concept. An important feature of the concept is its methodological substantiation in the form of cultural and philosophical visions and approaches, among which an important role belongs to the noospheric approach. The realisation of the human’s capability to purposefully influence evolution, ensuring control over natural processes with the help of the human mind, to achieve the harmony of humans and nature is what one should strive toward, implementing the Sustainable Development Goals.

2

Materials and Methods

The research on the interaction between humans and nature is the most important ideological issue, which goes deep into the spheres of philosophy, biology, ecology, sociology, economics, etc. The concepts of regulating these processes are implemented within separate theories, among which a special role—by the level of institutional development and implementation—belongs to the concept of sustainable development. Consideration of this concept from the position of the noospheric approach allows focusing not as much on the Sustainable Development Goals as on the values and mechanism of their achievement (Levit, 2000). Many researchers, sharing the values of the sustainable development concept, still criticise it because of the unsatisfactory results of implementation (Shyan et al., 2019); they propose solutions to the existing problems through the use of new knowledge and systemic influence on the studied processes (Scoones et al., 2020) and more active attraction of business

to these processes (Christ & Burritt, 2019). A special emphasis is made on innovations (Przychodzen & Przychodzen, 2018; Silvestre & Ţîrcă, 2019) and the potential of the digital economy (Renn et al., 2021) as the forms of materialisation of the “global mind” in the context of open science. The philosophy of sustainable development of economic systems has a solid scientific basis, which allows substantiating the positive and negative aspects of the concept and justifying the ways to solve problems through the use of the noospheric approach, especially in the part regarding global knowledge and technologies as the tool of targeted influence of human on natural processes, including a more active attraction of business systems to the studied processes. Thus, the purpose of this work is to identify the conditions of the system sustainable development of modern economic systems in the context of the position of the noospheric approach and to compare the conceptual conditions of humanity’s influence on the process of nature use according to these approaches.

3

Results

Over the entire period of evolution of the human civilisation, the interaction between humans and nature has been within the scientific and socio-cultural discourse. However, there was no clear and common—for the world—position on the human’s use of nature’s benefits. The institutionalisation of the principles of such interaction took place within isolated religious, philosophical or cultural trends, but without a common character. The first and only vision, which has a high level of institutionalisation and moves the political and economic activities of countries of the world, is the concept of sustainable development. This concept covers the complex of international norms, adopted at the level of the UN and ratified by most countries of the world. Its basis consists of the following: – Agenda 21, adopted in June 1992, at the Earth Summit in Rio de Janeiro, Brazil; – Millennium Development Goals (MDGs), supplemented at the Millennium Summit in September 2000 at UN Headquarters in New York; – The Johannesburg Declaration on Sustainable Development and the Plan of Implementation, adopted at the World Summit on Sustainable Development in South Africa in 2002; – Paris Agreement on Climate Change (December 2015), etc. The noospheric approach is a philosophical concept, which was formed in the early twentieth century by V.I. Vernadsky and P.T. de Chardin. According to it, humans participated not

Philosophy of System Sustainable Development of Economic Systems from the Position. . .

only in the socio-economic, socio-historical and scientific & technical processes—he is also an important factor in the evolutional process. Knowledge of the entire humanity and all living things on the planet, similar to the biosphere, forms a new type of sphere—the noosphere—sphere of reason. Within the noosphere, humanity accumulates all of its knowledge and uses it for the harmonious development of the world. Therefore, special attention is paid to science, education and the popularisation of progressive ideological values (Levit, 2000). The essence of the concept, which defines the conditions of sustainable development from the viewpoint of the noospheric approach is connected with the foundations of philosophy. The notion of “sustainable development” reflects the action of one of the main laws of dialectics—“unity of opposites”, according to which opposite constructs “sustainability—stability” and “development—change” are connected. Due to this, development acquires some sustainable features, and sustainability acquires dynamics in the form of a gradual transition to a higher level of development. Focusing on the environmental sustainability of economic development, the concept of sustainable development conforms to the principles of noospherism. It also requires the coordination of the goals and values of humanity for the benefit of the living environment, which is the Earth and even the space around it. Despite the features that are common for both concepts, the studied categories have essential differences. Thus, the concept of sustainable development is aimed at the minimisation of human influence on the state of nature and achievement of sustainability through the reduction of burden on the eco-system. In its turn, the concept of noosphere, on the contrary, defines humans as important participants of the geological evolution in the context of the formation of a harmonious image of our planet and defines the conditions of his participation in the evolutionary processes. In both cases, humanity is defined as an active element of the development processes, which is assigned an essential role in the observation of the principles of balance and system in the process of interaction with nature. Treatments of the principle of system in the context of the research also have different approaches. Some scholars treat system character in the unity of the economic, social and environmental components (Pezzey & Toman, 2002; Pitt & Samson, 2012), others see the system as the requirement for the achievement of all SDGs. We share the view given in Scoones et al. (2020), in which the authors state that the main condition of sustainable development can be presented in the coordination of the three following concepts: – Concept of development (socio-economic development according to environmental limitations);

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– Concept of needs (redistribution of resources to ensure the quality of life); – Concept of future generations (possibility for long-term use of resources to ensure the required quality of life of future generations). Besides, an important condition of the systemic character of sustainable development and the noosphere is manifested in the absence of borders in the natural processes. Accordingly, human influence on the ecosystem of one country is rarely limited by its borders. Most processes have an interpenetrating character; animals migrate between countries, many countries lie within the basin of the same river, and the atmosphere can move the results of mechanical, biochemical or nuclear pollution over long distances. The consistency of the studied processes requires the specification of the subject-object structure. Thus, realising the key role of humanity in the described processes, we treat it as something abstract. In reality, the most active influence on the natural environment is made by economic systems. Avoiding the precise determination of the key element of the nature use processes, we consciously ignore a range of opportunities provided by businesses from the position of sustainable development. In this aspect, we can determine the influence of the concept of sustainable development and the noospheric approach on the rational behaviour of economic systems (Fig. 1). In the existing system of sustainable development (upper part of the scheme), political levers dominate. Their implementation requires a long multi-level interaction between different institutions before the direct interaction between its activities and the economic systems. At that, the tools of influencing business may have an economic or administrative character and be implemented in the form of fiscal or programme-targeted regulation. Partially, the increase in this influence is ensured through public pressure from civil society or specialised institutions and the implementation of the concept of social responsibility of the business or economic motivation. Unlike the previous position, the noospheric approach to the organisation of rational interaction between humans and nature (the lower part of the scheme) does not require the creation of a special hierarchical scheme. But it can be implemented through intellectual and business elites through the development of the corresponding values in the educational process, popularisation of ideas of the noosphere, etc. As the tools of ensuring such influence (Christ & Burritt, 2019), propose using business academics—teachers in business schools and researchers who are attracted to cooperation with business systems.

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Fig. 1 A conceptual scheme of the influence of the approaches of rational interaction between humans and nature on economic systems. Source: Compiled by the authors

Approach from the position of sustainable development

International protocols and agreements Ratification of international norms in the national legislature National, sectoral and regional strategies, programmes and indicators of sustainable development

Concept of social responsibility of business, modelling with the help of grants and programmes

Goals, tasks and indicators of sustainable development

Correction of goals and activities of economic systems

Public influence

Intellectual and business elite

Noospheric approach

The key role of knowledge in the system of sustainable development from the position of noosphere under the conditions of globalisation and digitalisation defines new opportunities for their use for the well-balanced development and evolution. Knowledge can ensure development only if it is new and reliable. In this aspect (Przychodzen & Przychodzen, 2018), draw attention to the fact that the growing level of influence on the environment is a stimulus for innovations, and (Silvestre & Ţîrcă, 2019) notes that despite the presence of current environmental and social problems, we’re gradually moving toward a sustainable society, due to innovations. In the context of new knowledge and its use as a tool of evolutional development, special attention should be paid to the potential of the digital economy. The realisation is the huge potential of digitalisation to support the sustainable transformation of society and industry is demonstrated in Renn et al. (2021). An important condition for achieving the necessary results, according to scholars, is a common desire to adhere to the chosen path by all influential players in the market. On the whole, the digital economy is a good platform for achieving the system goals of sustainable development of economic systems, according to the noospheric approach. Apart from large opportunities for work with information in the form of knowledge, the digital economy, according to its nature, has a range of advantages, which allow for the direct achievement of the SDGs. The main advantages are the

specifics of production, transportation and utilisation of digital products. Such production requires minimum materials resources; also, no logistics chains are required for the transfer of such products; at last, utilisation of such products takes place in the virtual form (only the information carrier is disposed of). Thus, the digital may be an important platform for creating a global base of knowledge and the mechanisms of its use for the achievement of the SDGs and provision of the targeted evolution in the context of the noospheric approach. An important condition for the success of this idea is the general availability of the necessary knowledge and values, which could be ensured through the Open Science concept and recognition of common values of harmonious evolution by the entire humanity.

4

Conclusion

While the concept of sustainable development has a rather high level of institutionalisation, the study of the noosphere is of a more conceptual theoretical character. This requires a proper scientific discussion on the connection between the two given concepts and the creation of a comprehensive theory, which would allow coordinating ideas and goals of sustainable development with the conceptual provisions of noospherism.

Philosophy of System Sustainable Development of Economic Systems from the Position. . .

The research performed allowed identifying the specific features of using the concept of sustainable development and the noospheric approach in the context of the substantiation of a philosophical view of the interaction between humans and nature in the modern world. We revealed differences between them; there is also a common feature, which allows considering humans as an active element of the processes of development during the interaction with nature. The systematic character of sustainable development was considered from the position of the unity of the concept of development, needs and future generations. It was revealed that the economic systems have the main role in the process of natural environment use. According to this, we schematically showed the influence of the concept of sustainable development and the noospheric approach on economic systems. We also noted the complexity and political basis of the first concept. It was proposed to use the innovative and digital tools to create a space of world knowledge, which would ensure the controlled evolution through general coordination and agreement.

References Christ, K. L., & Burritt, R. L. (2019). Implementation of sustainable development goals: The role for business academics. Australian

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Journal of Management, 44(4), 571–593. https://doi.org/10.1177/ 0312896219870575 Levit, G. S. (2000). The biosphere and the noosphere theories of V. I. Vernadsky and P. Teilhard de Chardin: A methodological essay. Archives internationales d’histoire des sciences, 50(144), 160–177. Pezzey, J. C. V., & Toman, M. A. (2002). The economics of sustainability. Routledge. Pitt, D., & Samson, P. R. (2012). The biosphere and noosphere reader: Global environment, society and change (p. 6). Routledge. Przychodzen, W., & Przychodzen, J. (2018). Sustainable innovations in the corporate sector – The empirical evidence from IBEX 35 firms. Journal of Cleaner Production, 172, 3557–3566. https://doi.org/10. 1016/j.jclepro.2017.05.087 Renn, O., Beier, G., & Schweizer, P.-J. (2021). The opportunities and risks of digitalisation for sustainable development: a systemic perspective. GAIA - Ecological Perspectives for Science and Society, 30(1), 23–28. https://doi.org/10.14512/gaia.30.1.6 Scoones, I., Stirling, A., Abrol, D., Atela, J., Charli-Joseph, L., Eakin, H., Ely, A., Olsson, P., Pereira, L., Priya, R., van Zwanenberg, P., & Yang, L. (2020). Transformations to sustainability: Combining structural, systemic and enabling approaches. Current Opinion in Environmental Sustainability, 42, 5–75. https://doi.org/10.1016/j. cosust.2019.12.004 Shyan, D., Lakomova, O., & Sonko, S. (2019). Philosophy and methodology of concept of the sustainable development. Sustainable Development under the Conditions of European Integration. Part II, 2019, 195. Silvestre, B. S., & Ţîrcă, D. M. (2019). Innovations for sustainable development: Moving toward a sustainable future. Journal of Cleaner Production, 208, 325–332.

Philosophy of Sustainable Development Risks Through the Lens of the SDGs Anastasia A. Sozinova , Maria P. Tikhonovskova , Karina A. Chernitsova , and Victoria V. Kotlyarova

Abstract

Keywords

This paper shows the importance of the analysis of the achievement of the Sustainable Development Goals (SDGs) and the study of progress toward a secure and safe environment for prospering of all people on the planet in the context of the philosophy of sustainable development risks. The research objects are goals that present different levels of challenge and ambitions for different countries, depending on their modern state of development and other national circumstances. Analysis of the problem of the difference between the analysis of goals and analysis of the achievement of goals on the example of the selected set of goals, means of evaluation of the significance of the Sustainable Development Goals and identification and elaboration on the indicators of their achievement are the object of this research. It is revealed that different countries will have to pay different levels of attention and efforts to different goals and tasks, depending on the position of a country as to the level of achievement of goals in the given moment, differentiated responsibilities and different capabilities and resources. This problem requires further analysis and research, as well as the identification and application of the new method and ways of the process of simplifying and improving the assessment of the achievement of goals.

Analysis of goals · Philosophy of risks · Comparison of indicators · Priorities · Sustainable Development Goals · Achievement of goals

A. A. Sozinova (✉) Vyatka State University, Kirov, Russia e-mail: [email protected] M. P. Tikhonovskova Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia K. A. Chernitsova Plekhanov Russian University of Economics, Moscow, Russia V. V. Kotlyarova Institute of Service and Entrepreneurship (Branch) Don State Technical University in Shakhty, Rostov region, Shakhty, Russia e-mail: [email protected]

JEL Codes

E29 · E69 · F02 · F29 · O19

1

Introduction

The goal of this research is to identify and describe the directions of the improvement of the order of analysis of the philosophy of risks of goals and resolution of the tasks of achievement of goals, which is very important given a range of economic problems but is especially significant in the modern conditions of analysis of the 17 Sustainable Development Goals of the UN, which are acknowledged by the entire humanity as the adopted set of goals. This must take into account the opinions of different authors who also studied the issues of analysing Sustainable Development Goals and considered the problems and experience on the path of achievement of the Sustainable Development Goals and establishment of their relative (comparative) significance.

2

Methods/Literature Review

Analysis of the publications of this direction allows speaking of the realisation of substantial challenges related to the achievement of the SDGs at the global level and the scale of separate countries (or groups of countries). A separate block is publications devoted to the development of an approach to evaluating the efficiency of the achievement of

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_53

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the SDGs by certain countries (Hinson et al., 2019; Krivulia, 2020; Leal Filho et al., 2019; O’Connor et al., 2016; Sachs et al., 2019). A wide range of studies is aimed at the research of transformation problems of the achievement of the SDGs by developed countries (Bennich et al., 2020; World Health Organization, 2021) and a wide analysis of the level of the achievement of the SDGs in the OECD countries (OECD & Paris, 2017; UNESCO, 2016). This is a sign of the necessity for a differentiated approach to the formation of strategies and distribution of resources. The results of studies on the efficiency of developing countries’ achievement of the SDGs are rather interesting. The main focus of such studies is resources that are necessary for achieving the Sustainable Development Goals. In particular, Leal Filho focuses on such goals as the fight against poverty, healthcare and quality education and sets a question in the practical context: what would be the cost of the achievement of these goals, and what is the potential of state finances for this and what help is required? (Leal Filho et al., 2019). The research on the importance of institutions for achieving the SDGs by countries of the Eastern Partnership and Russia (Kostel et al., 2017) has shown that it is necessary to formulate an effective policy of economic development and effective establishments of the fight against corruption, to achieve progress in this direction. The importance of institutions for the achievement of the Sustainable Development Goals was confirmed as a result of the world forum (2016), which aimed at the overview of the 2030 Agenda for Sustainable Development and SDGs. Through institutional mechanisms, the SDGs are integrated into national policy and programmes (UNESCO, 2016). That is why the quality of institutions (formation of new or transformation of the current ones) should be considered as a precondition to achieving progress in the SDGs. In this research, we use the comparative method on the example of main macro-economic indicators. It is revealed that the balance between the social, economic and political efforts that are necessary for achieving different goals could be different depending on a country. By the example of the Millennium Goals, declared by the UN, the problem of the situational association of the notions “analysis of goals” and “analysis of the achievement of goals” is considered.

3

Materials

The study of the non-identity of the notions of “goals” and “achievement of goals” by the example of the UN Sustainable Development Goals is initiated by the existence of certain contradictions in the intentions of this global programme, which is aimed at the implementation of the 17 complex goals. In particular, it is possible to distinguish

a contradiction between the population’s desire to set goals and achieve them and the necessity to stand by goals that have been already adopted by a certain body above (or between the efforts of humanity to be sure in the improvement of life through the achievement of goals that are common for the humanity and the necessity for a certain organisation to control the achievement of these goals). Another contradiction could be the assumption that awareness of the existence of the sustainable development concept allows everyone to know that they also create progress in the achievement of certain goals and make them a part of the system. However, in the past, without any concepts, people were also able to care for the environment, develop businesses, raise the quality of their life, etc. “Goal” and “achievement of a goal” are very similar formulations and can be intuitively treated as the same formulations. However, “goal” belongs to the stage of goal setting in the cycle of managerial functions, i.e., before the initial stages of planning, and between the analysis of the achievement of goals and analysis of goals there lie all other stages of planning and all stages of order, organisation, execution, and control. There is a need to distinguish between the notions “analysis of goals” and “analysis of the achievement of goals”, since “analysis of the achievement of goals” envisages the existence of the analysis object in the form of certain programmes and positive or negative results of their implementation, and “analysis of goals” is appropriate mainly at the stage of development of plans, which could be achieved under certain conditions; analysis of the achievement of goals is aimed at the identification of results, which conform to the achievement of a specific goal or totality of these goals, i.e., the achievement will be accompanied by the analysis of results, not efforts. The importance of this research is due to the fact that as of now, the popularity of sustainable development expands horizons and most countries implement the UN Sustainable Development Goals, trying to improve their indicator every year. The Sustainable Development Goals are aimed at fighting poverty, protecting the planet and ensuring peace and prosperity for all people in the world. At present, almost 170 countries have adopted these Goals as a benchmark for their future development. Table 1 shows Russia’s average Sustainable Development Goals Index compared to the leaders and neighbouring countries. Achievement of certain target benchmarks depends on many factors that need the development of a set of measures and effective mechanisms for their implementation. This requires the study of the experience of other countries, which have certain positive results of sustainable development. The correct understanding of sustainable development in general and of the content of its goals, the achievement of which should be the object of analysis, is a significant competitive advantage for a given country, its national economy

Philosophy of Sustainable Development Risks Through the Lens of the SDGs Table 1 The sustainable development goals index

Position 1 2 24 44 46 48 55 59

307 Country Finland Sweden Belarus Kyrgyzstan Russia Moldova Azerbaijan Kazakhstan

Index 85.9 85.6 78.8 74.0 73.8 73.7 72.4 71.6

Source: Compiled by the authors based on Sachs et al. (2021)

in the world and companies that are part of this national economy. This raises the country’s level among others in the process of provision of sustainable development, which envisages well-balanced interconnection of the interests of three spheres of public life: environmental, economic and social. A high level of progress in the achievement of the Sustainable Development Goals will facilitate a country on the path to world leadership. The Sustainable Development Goals imply economic growth, an increase in the productiveness level and the use of technological innovations, which act in the spirit of partnership and are aimed at the correct choice for the stable growth of the quality of life for future generations. This programme of the declared global goals is not implemented in full yet, since it is planned until 2030, but it has been achieved to a certain extent. The age of sustainable development gives the understanding of humanity’s biggest problem—how humanity can exist in the harmony with the natural systems of the Earth, solving many problems it faces. Availability of resources influences geopolitical relations and can limit development. In the course of the growth of the world population and human needs for the improvement of living standards, resources that were earlier considered easily available—e.g., land for agriculture and drinking water—become more valuable. All forms of resource production and land use are connected with the economic, social, environmental and geopolitical costs and risks, as well as profits. New technologies and rules can change the balance of these factors. According to Salvia et al. (2019), the scientific modelling of the long-term influence of the use of resources on the environment could help detect potential problems and suggest ways to change things in the schemes of their use.

4

Results

In the analysis of goals and achievement of goals, it is necessary to pay attention to different groups of the elements of the problem situation description. However, the ties between them are not just complex but mediated through a group of elements, which play various roles in different aspects. Let us enumerate these groups of the elements of

the problem situation description of the analysis of the achievement of goals and point at the change of roles of five elements: 1. The state of the problem situation of achievement of sustainability of development and objects of controlled influence depends on the state of the elements of the problem situation. Any problem situation of the achievement of sustainability of development and objects of controlled influence can be described based on the analysis of the state of five complex elements, namely provision with resources, technical equipment, development of institutions, level of human development and quality of life. 2. The objects of influence to achieve the sustainability of development at different stages of the completion of programmes and the achievement of different goals are different components of the set of five elements, which unify the components necessary for achieving the goals and which are, at the same time, the objects of influence on the achievement of the sustainability of development; 3. Subjects of the achievement of the sustainability of development try to solve global problems, striving toward the improvement of the quality of their life. But the resolution of global problems is not always a complex problem, since the achievement of isolated and common goals is interconnected; 4. complex elements (provision with resources; technical equipment, development of institutions, level of human development and quality of life) could be the factors of the sustainability of development—direct and indirect—since they affect each other. 5. If the means of achieving the goals are controlled factors, and the factors could be all complex elements (provision with resources; technical equipment, development of institutions, level of human development and quality of life), all complex elements, given they belong to the range of controlled elements, should be assigned not only to the factors of sustainability or objects of influence but also the means of achieving of goals. This should be considered from the positions of their different manageability by different subjects, i.e., we have here its multi-aspect

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character and uncertainty of the interacting roles of the groups of interests and groups of action; 6. Formulation of the tasks of the achievement of the sustainability of development can be based on the use of changes in the given studied complex elements as benchmarks: the creation of the necessary conditions for timely provision with necessary resources; search for the ways to strengthen the technological equipment of economic subjects; adoption of the corresponding programmes of the institutions’ development. To achieve the Sustainable Development Goals, it is necessary to understand the differences between the considered phenomena and implement new programmes and projects, which will ensure in practice the macro-economic stability, ecological balance and social cohesion. The Sustainable Development Goals will be a common basis for further transformations. In the centre of sustainable development, we see not only a particular person, who has a right to a healthy and productive life in harmony with nature but also the entire humanity. Provision of this requires the change of the stereotypes of values, humanisation of society, activation of social policy and provision of social benefits to the population. This also needs the change in the methodological tools of goalsetting, organisation, planning, administration, control and analysis of the processes, with which many different groups are involved.

5

Conclusion

In this research, we considered the difference between the notions of “goals” and “achievement of goals”, as well as the importance of the Sustainable Development Goals for the modern world and the necessity for stimulation of the domestic and international experience on the path toward the improvement of the spheres of public life for its development, stability and security. During the analysis of the achievement of goals, there might emerge certain drawbacks of the organisation of the process, which should be avoided. It is necessary to avoid the association of the notions of “goals” and “achievement of goals”. One should not also perform the analysis of the achievement of goals without analysis of goals, since the analysis of goals is primary—there could be no analysis of the achievement of goals without analysis of goals. It is impossible to achieve something if there is no set goal. There should be also the differentiation between the groups of subjects and, accordingly, their goals and

achievements (Sachs et al., 2021). It is necessary to understand that everyone has their capabilities and results—people may strive toward an increase in progress in the achievement of a certain goal, but the result might be insignificant in the absolute terms but rather large in the relative terms. Acknowledgments The research was performed within the grant of the President of the Russian Federation for state support for the leading scientific schools of the Russian Federation (NSh-239.2022.2).

References Bennich, T., Weitz, N., & Carlsen, H. (2020). Deciphering the scientific literature on SDG interactions: A review and reading guide. Science of the Total Environment, 728, 138405. Hinson, R., Lensink, R., & Mueller, A. (2019). Transforming agribusiness in developing countries: SDGs and the role of FinTech. Current Opinion in Environmental Sustainability, 41, 1–9. Kostel, M., Leus, D., Cebotarenco, A., & Mokrushina, A. (2017). The sustainable development goals for eastern partnership countries: Impact of institutions. SocioEconomic Challenges, 1(3), 79–90. https://doi.org/10.21272/sec.1(3).79-90.2017 Krivulia, P. V. (2020). Non-compliance with the opposition of the positions of goal analys is and goal achievement analysis in the structure of the management cycle and the resulting cognitive errors of analysis. In P. V. Krivulia (Ed.), Enterprise Economics: modern problems of theory and practice: Ma terials of the Ninth International Scientific-Practical Conference, September 11–12, 2020 (pp. 56–57). ONEU, FOP Bondaren ko M.O. Leal Filho, W., Tripathi, S. K., Andrade Guerra, J. B. S. O. D., Giné-Garriga, R., Orlovic Lovren, V., & Willats, J. (2019). Using the sustainable development goals towards a better understanding of sustainability challenges. International Journal of Sustainable Development & World Ecology, 26(2), 179–190. O’Connor, D., Mackie, J., Van Esveld, D., Kim, H., Scholz, I., & Weitz, N. (2016). Universality, integration, and policy coherence for sustainable development: early SDG implementation in selected OECD countries. OECD, S., & Paris, M. (2017). Measuring distance to the SDG targets: An assessment of where OECD countries stand. Sachs, J. D., Schmidt-Traub, G., Mazzucato, M., Messner, D., Nakicenovic, N., & Rockström, J. (2019). Six transformations to achieve the sustainable development goals. Nature Sustainability, 2(9), 805–814. Sachs, J., Kroll, C., Lafortune, G., Fuller, G., & Woelm, F. (2021). Sustainable development report 2021. Cambridge University Press. Salvia, A. L., Leal Filho, W., Brandli, L. L., & Griebeler, J. S. (2019). Assessing research trends related to Sustainable Development Goals: Local and global issues. Journal of Cleaner Production, 208, 841–849. UNESCO. (2016). Sustainable development in the least developed countries–towards 2030. World Health Organization. (2021). Stronger collaboration for an equitable and resilient recovery towards the health-related sustainable development goals: 2021 progress report on the global action plan for healthy lives and well-being for all.

Sociology of Sustainable Development: The Role of Responsible Communities in the Achievement of the SDGs and the Advantages for the Quality of Life Nurgul K. Atabekova Petrenko

, Svetlana A. Tikhonovskova

, and Elena S.

Abstract

JEL Codes

Purpose: This work aims at the systematisation of the elements of socio-economic policy and the specifics of the influence of socially responsible communities on the provision of the achievement of high indicators of sustainable development as advantages for the quality of life of Scandinavian countries. Design/methodology/approach: The following methods are used: method of setting priorities, systemic approach and trend method. Findings: We reveal the specifics and problems of the achievement of high social standards in Scandinavian countries and determine the indicators of provision of a decent quality of life and prospective consequences of the continuation of these countries; implementation of socioeconomic policy. We also prove the necessity to transform the studied countries’ approach in this sphere, to avoid a crisis in the social sphere and economy. Originality/value: The scientific novelty of this research is the elaboration on the theoretical foundations of the set of characteristics of socio-economic policy that is implemented by governments of Scandinavian countries and the specifics of the activities of socially responsible communities in the sphere of increase in the quality of life.

J38 · J31 · J20 · Н53 · Н55 · I38

Keywords

Socially responsible societies · Scandinavian countries · Socio-economic policy · Social standards · Quality of life · System of taxation

N. K. Atabekova (✉) International University of Kyrgyzstan, Bishkek, Kyrgyzstan S. A. Tikhonovskova Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia E. S. Petrenko Plekhanov Russian University of Economics, Moscow, Russia

1

Introduction

The quality of life and the main parameters of development of the social sphere are considered in modern scientific studies not only as a result of the economy’s formation but also as a consequence of the change of the policies of states and communities in diverse spheres. Transformations in the society and economy of countries predetermine the necessity for the formation of an effective policy in the sphere of increase in the quality of life and sustainable development in the social sphere. The growth of the level of the social component of sustainable development depends on the national policy and the activities of the business and civil society. A responsible attitude toward the provision of the quality of the population’s life envisages a responsible attitude toward the payment of taxes by citizens and subjects of the economy and the implementation of social measures within the development of entrepreneurs and companies of various sectors. Some countries demonstrate, in the process of their development, sustainable development in the social sphere, and their experience can be used in regions that have problems in this direction. Significant success in the sphere of social policy management was achieved by Scandinavian countries. The responsible attitude of the main communities of these countries toward the provision of a high level of development in the social sphere is an object of this research due to the importance of their policy in this direction. The purpose of this study consists in the systematisation of the elements of the socio-economic policy and the specifics of the influence of socially responsible communities on the provision of achievement of high indicators of sustainable development as the advantages for the quality of life of Scandinavian countries. The following tasks are solved given this purpose: analysis of the directions of socio-

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_54

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economic policy of Scandinavian countries in the sphere of provision of high results in the quality of life; evaluation of the directions of the influence of the business sector and other institutional structures on achievements in this sphere.

2

Materials and Method

The issues of assessment of sustainable development in the social sphere in Nordic countries were studied by certain authors regarding social policy and participation of particular responsible communities in the increase in the quality of life (Asen, 2020; Bacache-Beauvallet et al., 2017; Greve et al., 2020; Haave, 2019; Helmann, 2021; Hussénius, 2022; Marmot, 2018; Mechitov & Moshkovich, 2021; Torp & Reiersen, 2020). The issues of implementing the strategic direction of corporate social responsibility within the activities of the entrepreneurial sector of Nordic countries were studied in Toft and Rendtorff (2021). Despite the existence of the studies of the given problems, there is a necessity for the systematisation of the main directions in this sphere, which are peculiar to the modern stage of development. In this research, we use the following methods. The method of setting priorities is utilised to identify the goals of sustainable development in the social sphere, which are top-priority for the studied countries. The method of systemic approach is used to determine the key directions of the social policy of countries and the strategic development of socially responsible communities, which function at the national levels. To reveal the tendencies of the development of these directions, we use the trend method. The key indicators that allowed the selection of Scandinavian countries (Denmark, Norway and Sweden) as countries with a high level of socially responsible communities that ensure high quality of life is the quality of life, level of population incomes and quality of education.

3

Results

Let us formulate the main characteristics of the socioeconomic policy of the studied countries, which predetermine high indicators of the quality of life. The first direction, which is decisive in the creation of a high level of social well-being in all Nordic countries, is participation and globalisation and the development of the free market. Sweden, Norway and Denmark integrate effectively in the international markets and adapt to the globalisation processes, which ensures a high level of GDP from export operations. Namely, in 2020, Denmark achieved the level of export of goods and services of 54.9% of GDP, Sweden—44.6% and Norway—32.2%; while the world

average indicator equalled 26.5% (World Bank, 2022). Also, the participants of the business sector of these countries participate—within the globalisation tendencies—in various international and global network enterprises and transnational corporations in the sphere of engineering, telecommunications, car building and energetics (Sweden and Norway). Participation in the globalisation processes and functioning of the free market are ensured due to the corresponding entrepreneurial climate (support of innovative activities should be noted) and due to the active development of national business communities of these countries in the sphere of international business integration. The second element in socio-economic policy in Scandinavian countries is economic equality (Mechitov & Moshkovich, 2021). According to the statistical data, the value of the minimum difference in the population’s incomes is observed in Nordic countries. The share of the population below the poverty line in Nordic countries is 4.5–6.5%. The top-priority tasks of national social policy in Scandinavian countries are total employment, levelling of population’s incomes and reduction of the society’s differentiation by the level of income. A developed state-owned sector of the economy is the basis for the financing of the social sphere. A high level of taxation further strengthens it. Analysis of Bacache-Beauvallet et al. (2017) shows that as of year-end 2021, a part of government expenditures for the social sector in GDP was 66% in Sweden, 61% in Denmark and 51% in Norway. The main part of these expenditures is used for the satisfaction of the population’s social needs. A large share accounts also for transfer payments, which allow for redistribution of national product in favour of the most disadvantaged groups of the population. The main feature of the Scandinavian model is the universalisation of social protection of the population as a guaranteed right of all citizens (Greve et al., 2020). The model is peculiar for the large role of the state in income sharing and the national social mechanisms of management. The state ensures a high level of quality and affordability of social services (including free healthcare services, education, etc.). The Scandinavian type of social state is peculiar for the universalism and redistribution of incomes through the progressive system of taxation. This model is based on the system of social insurance with certain payments of contributions from employees and employers. The fight against poverty is combined with support for the high living standards of all citizens. The economic basis of this model is effective production, full employment, strong associations of employers and unions, relations between them that are controlled by the government and a high level of redistribution of public product. Social policy is financed by the government from the budget assets (through the system of taxation). The research of scientific and analytical data showed that within this

Sociology of Sustainable Development: The Role of Responsible Communities in the. . .

model, countries ensure the realisation of guaranteed rights and actions of social protection and are responsible for the active functioning of various non-government social services. This is possible in the case of strong and decentralised management. The third direction of the studied policy is the system of taxation. Analysis of Haave (2019), Helmann (2021) shows that high taxes in Nordic countries facilitate economic equality in society; they are the basis of government policy since tax revenues finance the programmes of social provision for citizens. While the basic rate of income tax in countries of the EU is 21.47% and in countries of G7—24%, this indicator is much higher in Scandinavian countries (Denmark—55.9%, Sweden—57% and Norway—38.2%) (Asen, 2020). According to Marmot (2018), Torp and Reiersen (2020), using the assets from redistributed taxation, Scandinavian countries ensure the financing of education, social benefits of different categories and healthcare. Due to the systems of taxation, each citizen has equal access to the services provided. Analysis of statistics shows that Scandinavian countries spend 7–8% of GDP on education (Norway - 7%, Sweden—7.3% and Denmark—7.9%), while the average indicator of financing of education in the world is at the level of 4.9%. The Swedish doctrine of the social state became the most popular. It takes the government’s care of citizens to the level of national cult, guaranteeing safety, reliability and protection in threatening situations. Citizens do not depend on their relatives or charity, let alone the market. The government takes care of a person over the course of their entire life. Analysis of Hussénius (2022), Irwin (2019) allows stating that the Swedish model has the following specific features: regulation of labour relations at the national level (adoption of tariff rates and collective agreements); implementation of social policy that ensures the lowest differentiation of population by the level of incomes; orientation of the policy of employment at the minimisation of unemployment, primarily through retraining of employees; development of the production democracy, etc. It should be noted that the development of each of the above directions of social policy led to impressive results. There are certain problem aspects of implementing the socio-economic policy of Scandinavian countries, which include: – High taxes and growth of demand for social services. High taxes are a significant factor in restraining entrepreneurship; in recent years, many companies and entrepreneurs have been demonstrating an orientation toward foreign markets and countries with lower taxes. Accordingly, the

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tax systems of Scandinavian countries might, with time, change in favour of the reduction of tax rates, which, in its turn, will influence the social standards; – Abuse of social payments. Given the fact that the system of taxation and system of employment do not envisage the stimulation of citizens toward the achievement of professional success, citizens do not have active personal development in the sphere of advanced training and improvement of skills, and professional growth is not the priority; – Immigration and demographic changes. A high inflow of immigrants raises the pressure on the system of social benefits. Despite the large stimulation of the birth rate by Scandinavian countries, the problem of ageing of the nation becomes more important for this region, which, in the future, can lead to a reduction in the working population. Achievements in the social sphere depend on the national policies and the activities of socially responsible communities. In Scandinavian countries, this category includes the business sector and unions. Analysis of Toft and Rendtorff (2021) shows that the key directions of the influence of these subjects on the preservation of the quality of life of citizens at the modern stage are as follows: – Corporate social responsibility, accepted by the subjects of the entrepreneurial sector by the terms of partnership relations with the government. This strategic direction of development of companies and corporations is oriented toward the resolution of social problems and problems of population’s employment. The top-priority feature of implementing this parameter is the transparency of information on the activities of all subjects of entrepreneurship in the sphere of corporate social responsibility and the necessity for an orientation toward a positive experience. Under the conditions of globalisation, this direction is widely used not only in Nordic countries. A specific feature of the use of this direction in the studied countries is high indicators of human development (retraining, advanced training for mastering new technologies) and income of corporations’ personnel; – Trade union movement, which covers more than 75% of the working population of Scandinavian countries and deals with the social and economic protection of its members. This protection includes the participation of a trade union as a participant in labour agreement; support for citizens who are members of trade unions in case of the loss of a job; negotiations with the government and management of companies and representatives of companies

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countries to have the leading positions in the sphere of provision of high quality of life.

of certain sectors that are aimed at the protection of rights and interests of employees.

4

Discussion

This research allowed revealing that the modern strategy of the socio-economic policy of Nordic countries is the strategy of universalism. This direction is the key aspect of development for countries of social well-being, and it implies that each citizen and family, despite the social status, can have universal rights in the sphere of social provision in case of disability, sick leave, loss of job, retirement age, the birth of a child, etc. It should be noted that the system of the Scandinavian model of universalism, which includes the provision of the population’s well-being (free and quality education, medicine, employment, safety of life, social integration, openness of markets with minimum barriers and high level of income) is aimed at preserving and increasing the high quality of population’s life. The basis of the achieved results in the sphere of social standards in Scandinavian countries is as follows: – Socio-economic transformation and historical preconditions, which influenced the development of the trade union movement, dissemination of the ideas of social equality in society and adoption of the necessity to support high social standards of life in society; – The parity approach in interrelations between government and business community in the sphere of implementation of corporate social responsibility in the aspect of achievement of high standards of the quality of life of employees and provision of social standards (population’s employment, high income (wages), use of the retraining measures, training of personnel in the sphere of mastering of new technologies); – High level of development of economy and production of goods (services) with high value added, which ensures large GDP of the studied countries. Significant economic growth of Denmark, Sweden and Norway is ensured due to the effective international integration and high quality of products (services) that are exported. Also, an important role belongs to the national policy of regulation of competition and openness of markets in the studied countries. Besides, the economic development of these countries is affected by geographical position, availability of natural resources (2021–2022 saw the increase in Norway’s role as the biggest supplier of oil and gas in Europe); – Activities of socially responsible communities, the key role among which belongs to large subjects of the business sector and trade union organisations. These directions of the activities of the communities allow Scandinavian

5

Conclusion

In this work, we systematised the directions of the policy of Scandinavian countries and strategic characteristics of the development of socially responsible communities in the sphere of provision of high quality of life. The identified top-priority spheres of achievement of high indicators of development (system of taxation, corporate social responsibility of business communities of countries and activities of trade unions) demonstrate the orientation toward the creation of socio-economic well-being of citizens. It is possible to state that despite the positive role of a system of high social standards in Scandinavian countries, there emerge the tendencies of non-acceptance of the government’s approach to their formation. Namely, high taxes under the conditions of crises phenomena in the natural resources markets and certain sectoral markets, high requirements in the sphere of corporate social responsibility (social payments during the lockdown, etc.), the influence of the global economic crisis, absence of professionalization of personnel (new applicants, who are often immigrants, do not have knowledge and experience of work with the innovative equipment and technologies and do not have skills of interaction with colleagues due to the language problem) predetermined the necessity to move production to other countries or lead to their reduction of closure. Due to the above, these countries might soon face problems with budget revenues and implementation of government programmes in the sphere of social payments to citizens of different categories. It should be stated that despite the existence of large advantages of the socio-economic policy of Nordic countries, there is a necessity for certain transformations in the direction of stimulation of employers to function in the territory of these countries, stimulation of population for an increase in the level of professional development and change of tax rates for motivating the development of the business community. Acknowledgments The research was performed within the grant of the President of the Russian Federation for state support for the leading scientific schools of the Russian Federation (NSh-239.2022.2).

References Asen, E. (2020). Insights into the tax systems of Scandinavian countries. Tax foundation. Accessed June 03, 2022, from https://taxfoundation. org/bernie-sanders-scandinavian-countries-taxes/ Bacache-Beauvallet, M., Bureau, D., Giavazzi, F., & Ragot, X. (2017). A strategy for public spending. Notes du conseil d’analyse économique, 43, 1–12.

Sociology of Sustainable Development: The Role of Responsible Communities in the. . . Greve, B., Blomquist, P., Hvinden, B., & van Gerven, M. (2020). Nordic welfare states-still standing or changed by the COVID-19 crisis? Social Policy & Administration. Accessed June 03, 2022, from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7753633/ Haave, P. (2019). The winding road of the Norwegian “welfare state”. In The changing meanings of the welfare state: Histories of a key concept in the Nordic countries, pp. 179–225. Helmann, M. (2021). How is the Nordic welfare state doing? Contemporary public constructs on challenges and achievements. Nordisk Välfärdsforskning| Nordic Welfare Research, 1, 160–179. Hussénius, К. (2022). Gender and ethnicity in social assistance assessments of single applicants with substance abuse problems. European Journal of Social Work, 25(2), 210–223. Irwin, R. (2019). Sweden’s engagement in global health: A historical review. Global Health 15, 79. Accessed June 03, 2022, from https:// globalizationandhealth.biomedcentral.com/articles/10.1186/s12992019-0499-1#citeas

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Marmot, M. (2018). Nordic leadership and global activity on health equity through action on social determinants of health. Scandinavian Journal of Public Health, 46, 27–29. Mechitov, А., Moshkovich, Н. (2021). Nordic model: What makes Scandinavia so special. Accessed June 03, 2022, from https:// www.researchgate.net/publication/350757110_NORDIC_ MODEL_WHAT_MAKES_SCANDINAVIA_SO_SPECIAL Toft, K. H., & Rendtorff, J. D. (2021). Corporate social responsibility in Denmark. In CSR, sustainability, ethics & governance. Current global practices of corporate social responsibility (pp. 79–97). Springer. Torp, S., Reiersen, J. (2020). Globalization, work, and health: A Nordic perspective. International Journal of Environmental Research and Public Health, 17(20), 7661. Accessed June 03, 2022, from https:// www.ncbi.nlm.nih.gov/pmc/articles/PMC7588888/ World Bank. (2022). Exports of goods and services. Accessed June 03, 2022, from https://data.worldbank.org/indicator/NE.EXP. GNFS.ZS

Social Aspects of the Sustainable Development Risks: Social Support for Responsible Innovations vs. “Human Factor” as a Barrier on the Path of Their Implementation Aibek Y. Kunnazarov , Juliana А. Kitsai , Elena A. Lysova , and Lyudmila M. Lisina

Abstract

Purpose: Classification of the specific features of the emergence of risks that are connected to the influence of the human factor in the sphere of implementing responsible innovations in the environmental and social spheres. Design/methodology/approach: The following methods are used: a systematic approach, universalization and factor analysis. The research is performed based on the scientific, statistical and analytical data, as well as the experience of human factor management in countries of Europe and Asia. Findings: We determine the main directions of the dependence of the influence of the human factor and sphere of the emergence of risks within decision making and implementation of innovative solutions and substantiate the consequences of the development of this phenomenon’s influence on the parameters of the sustainable development of certain countries. These characteristics of the elements (directions) of the human factor development could be used as a methodological basis for forecasting the emergence of threats (risks) of various categories in the activities of companies and the formation of the indicators of sustainable development of countries. Research of the problems related to the disregard of the human factors’ influence in the sphere of implementing responsible innovations allows stating the necessity to take into account its influence on the development of A. Y. Kunnazarov (✉) Batken State University, Batken, Kyrgyzstan J. А. Kitsai Immanuel Kant Baltic Federal University, Kaliningrad, Russia E. A. Lysova Vyatka State University, Kirov, Russia L. M. Lisina Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia

companies and the need for the development of measures on assuaging or reducing the negative influence. Originality/value: The scientific novelty of this research is the development of theoretical aspects in the sphere of classification of the specifics of the influence of the human factor on implementing innovative solutions for sustainable development, in the direction of determining risks connected to the negative effect of this phenomenon. Keywords

Human factor · Risks · Responsible innovations · Environmental and social spheres · Sustainable development · Negative influence · Personnel

JEL Codes

J21 · J39 · J53 · O31 · O33 · O49

1

Introduction

At the end of the twentieth century, the basic principles of the progress of the world civilization became the principles of sustainable development and the concept of innovative development. Production management based on sustainable development requires the creation of a new mechanism of state regulation of the innovative activities in a country, implementation by the subjects of the economy of the corresponding innovative solutions in the sphere of ecologisation of production and effective management of labour resources. An important condition for the development of the economy that is oriented toward sustainable development is the formation of policy that would reorient the subjects of entrepreneurial activities from the traditional to the innovative hi-tech production, which is oriented toward

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_55

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the effective use of resources. However, the innovative policy of many countries is not effective enough and does not conform to the modern requirements and challenges. The economic power of any country is measured by the level of its scientific potential and is based on the continuous reproduction of a wide spectre of innovative goods and services. Provision of such potential takes place under the influence of certain factors, of which some might become strong barriers that created difficulties for achieving the sustainable development of a country. The human factor can be considered one of the most substantial levers of the slowdown of sustainable development of certain countries as to the implementation of innovations in the sphere of ecologisation and the social sphere. Given these problems, studying the key aspects of this factor amid crises and the growth of the necessity to implement innovative solutions in different spheres of the economy is very important at the current stage of the development of scientific thought. The purpose of this research is to classify the specific features of the emergence of risks related to the influence of the human factor in the sphere of implementing responsible innovations in the environmental and social spheres. To achieve this purpose, the following tasks are solved: classification of the characteristics of the influence of human factor in the sphere of responsible innovations implementation in the environmental and social spheres; systematisation of the specifics of the influence of human factor on the emergence of sustainable development risks in these directions.

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Materials and Method

The issue of the influence of human factor on the results of implementing various innovations in the environmental and social spheres and provision of the sustainable development of countries was studied in Bailey et al. (2017), Baldassari and Roux (2017), Bevilacqua and Ciarapica (2017), Hanh (2021), Islam et al. (2017), Kandemir and Celik (2021), Molino et al. (2020), Morag (2018), Rizwan and Bhatti (2020). Despite the existing array of scientific data, there is still a need for the classification of the main directions of the influence of this phenomenon on the effectiveness of implementing the responsible innovations of the environmental and social character. The theoretical analysis and the study of the approaches to the issues of implementing innovations and the directions of the negative influence of the human factor and the development of the related risks within the achievement of sustainable development are performed with the help of the systematic approach. The method of universalisation is used to formulate the classification of the characteristics of the emergence of risks, predetermined by the impact of the

human factor in this sphere. Factor analysis is utilised to reveal the influence of the human factor on the implementation of innovations for the provision of sustainable development of countries. The characteristics of the influence of the given phenomenon on implementing responsible innovations are considered by the example of Vietnam, China, India, Pakistan, Turkey and Italy.

3

Results

It is important to identify the main approaches to the classification of characteristics of the influence of the human factor in the sphere of responsible innovations implementation in the environmental and social spheres and to reveal the main risks for sustainable development due to the influence of this factor’s elements. First, it is necessary to distinguish the direction of the influence of the human factor, which is connected with the level of control over the technological process by the management and the existence or absence of a formal model of employees’ behaviour during the emergence of problems with the use of new equipment. This element of the human factor is related to technological and personnel control and training of personnel in mastering and use of innovative technologies (Bevilacqua & Ciarapica, 2017). This direction is predetermined by such characteristics of innovative development as the implementation of innovative technologies in production and the readiness of human resources for the change in technologies and their mastering. Having studied the scientific approaches in Bevilacqua and Ciarapica (2017), Hanh (2021), Rizwan and Bhatti (2020), we determined that sustainable development risks that are related to the influence of the human factor on the implementation of innovations in the sphere of ecologisation and social sphere include the following: – Problems with the placement of high-tech productions based on outsourcing in different spheres; – Difficulties with mastering of new equipment and technologies by personnel who have no knowledge or experience in this sphere; – Problems with participation in hi-tech projects due to low level of knowledge of foreign languages with personnel and low level of professional training. IT outsourcing is an innovative direction in the sphere of management of production (goods and services) since it ensures the transfer of a range of activities for performance to subjects that specialise in a certain sphere and can offer lower expenditures compared to expenditures borne by the customer in the case of independent activities. Under the conditions of globalisation of the digital economy, the

Social Aspects of the Sustainable Development Risks: Social Support for Responsible. . .

practice of IT outsourcing a wide range of productions is widely used (system administration, software and software maintenance). Analysis of the influence of this direction of human factor on the emergence of sustainable development risks in the sphere of IT outsourcing (including in the environmental sphere and HR management) has shown the following. A lower level of placement of high-tech productions with high value added by leading companies (IT market) is observed in countries that do not have a high level of human resources development. The leader of the world IT outsourcing is India ($194 billion in national GDP) (Community.nasscom.in, 2022). Personnel of the leading IT companies of India have good knowledge of English and professional knowledge in the sphere of programming, system administration and production of electronics. Thus, such high indicators are achieved. A high level of China’s government’s participation in the development of the IT sector did not allow ensuring a similar share of GDP from the activities of IT outsourcing (low level of English is one of the reasons). In 2021, revenues from the sales of products (services) of IT outsourcing in China equalled $104.5 billion (Allianceexperts, 2022). A high level of implementation of innovations in IT outsourcing in Vietnam did not allow reaching substantial revenues from the sales in this sphere: $7.32 million (Statista, 2022). This is due to the low level of human development, caused by the insufficient knowledge of foreign languages (in particular, English), which negatively influences the communication between performer and customer; absence of effective managerial approaches regarding the consulting of personnel (the administrative approach among middle managers is used); absence of effective control according to the international standards on the provision of safety and quality of work of personnel, which leads to the reduction in the attractiveness of Vietnamese IT outsourcing (Hanh, 2021). Companies from countries with a high level of personnel training, continuous professionalization, knowledge of foreign languages and orientation toward high indicators of the quality of life and attraction of personnel to the standards of ecologisation in all spheres ensure high revenues (share in GDP) from IT outsourcing through participation in hi-tech projects. This is due to the fact that these economic subjects observe standards in the sphere of human development and the environmental sphere that are adopted in the country of location of the customer. Countries with low standards of ecologisation (unsustainable materials and resources, production that pollutes the environment) and human development often function in the sphere of IT outsourcing with low value added. As an example, it is possible to consider the structures of IT outsourcing in Pakistan, where personnel do not have a high level of English and are not aimed toward the increase in the level of professionalization and readiness for the study of innovative

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technologies. According to Rizwan and Bhatti (2020), despite a high share of revenues from IT outsourcing in GDP, the former has low profitability due to the orientation toward the assembly of electronics. Since the workforce is very cheap in Pakistan, the level of profitability from such activities is 5–10%. Second, there is an element of the influence of the human factor, which is connected with the actions that violate the technology or incorrect decisions (unintentional negative influence on the production process). Within this direction of research (Islam et al., 2017; Kandemir & Celik, 2021; Morag, 2018), distinguish the following range of components: – Factor of a high burden on employees, which leads to the mistakes of technical character and reduces attention and execution of instructions and procedures (weariness because of long duration of shift or extra working hours; distraction because of outside factors (social networks); lack of attention due to complex personal situations; poor health) (Kandemir & Celik, 2021) considers the typical errors of the operators of marine craft exploitation and technical maintenance in Turkey, which emerge because of the effect of this factor. The authors note that the key reason for such errors in this sphere is the absence of the systemic and objective assessment of the reliability of personnel that would be performed with the use of AI; – Factor of incompatibility of cultural traditions and norms of work communication, which leads to errors during decision making and execution of instructions. The influence of this factor is observed in the sphere of implementation of new technologies and use of innovative equipment in hi-tech production and maintenance, in which procedures are coordinated between companies to which the operations are outsourced and companies that outsource them. There are problems in maritime logistics and implementation and service maintenance of new equipment in oil refining and oil production (Islam et al., 2017). It is possible to state that the risks of development of this element of the human factor’s influence (unintentional negative influence on the production process) are as follows: – Environmental problems and disasters (e.g., the Costa Concordia disaster in 2012 and explosions in the port of Beirut in 2020); – Threat to citizens’ safety (including personnel and customers) due to the errors that lead to catastrophes and disasters; – Economic risks connected with a high level of losses that are to be compensated by the subject of entrepreneurship which is guilty of the disasters or failures or by the

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government (this depends on the legal terms and character of safety measures regulation). The above factor leads to the emergence of risks that reduce sustainable development and the effect of innovative solutions. Accordingly, the main possibility for the emergence of such risks in most cases is the insufficiently effective assessment of the readiness of personnel to the work with equipment (including new equipment) and the systemic evaluation of personnel’s reliability. Third, it is necessary to note the direction of the human factor influence that is related to implementing technological changes without clear instructions for personnel and heed to the need for the implementation of innovations in the sphere of adaptation to new technologies and systems. If there is no set of measures on employees’ acquaintance with the requirements to the work with new equipment and technologies in various spheres, there appear problems and risks to the environment, economic and social character: if personnel (e.g., operators of new machines and technological lines) are not involved in the system of implementation of new technologies and equipment, the personnel might stop the process or make an incorrect decision, which would lead to defects or failures in work; if employees are not motivated to show initiative or if it is not welcome, the company— within the administrative approach to management—bears losses of time and resources and suffers failures because of the insufficient delegation of authorities (Baldassari & Roux, 2017; Molino et al., 2020). According to the authors, who consider these risks in the context of the innovative companies’ activities in Italy, the emergence of risks is most peculiar for structures that do not have constant personnel but attract outsourcing companies for different processes. These outsourcing companies work with temporary personnel (very often immigrants, who do not have good professional training or knowledge of the language). Because of the absence of interest, innovative processes and technologies do not bring the expected effect (in the sphere of production waste reduction and increase in personnel productiveness).

4

Discussion

The characteristics of the human factor elements and risks of its influence within the studied sphere of innovative development have shown that modern economic subjects create the basis for the sustainable development of countries. Countries with a high level of companies’ acceptance of this phenomenon within the environmental and social components, which are declared at the national level), influence their achievement (examples of India and China). Countries in which subjects of entrepreneurship are not oriented toward the

necessity to consider the human factor cannot provide high results in the sphere of the implementation of modern innovative technologies. We revealed the dependence between the risks of sustainable development during the simultaneous implementation of responsible innovations due to the impact of the human factor, which could be determined in the following directions: low level of control and instructions by the management and insufficient effectiveness; growth of the volume of activities; high workload on employees; cultural differences; environmental and economic risks; insufficient involvement and training with innovative technologies, systems and equipment; low motivation and failures in production processes; environmental threats; decrease in personnel productiveness.

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Conclusion

It is possible to conclude that there is a need to assuage or reduce the negative influence of the human factor and its components in the process of responsible innovations implementation in the manufacture of products (provision of services). Given the significant role of this factor, it is important to search for modern strategies and models that would have a formal structure and individualism with the use of the means of artificial intelligence. The existing methodologies and software do not possess high adaptability to the conditions of functioning of companies of various scales and spheres. It is very important to study the influence and limits of the effect of the human factor on the emergence of certain risks, given the changes in the structure of workforce potential of countries (growth of the number of able-bodied immigrants, reduction in the number of professional workers).

References Allianceexperts. (2022). China IT industry and software sector per city and region. Accessed June 07, 2022, from https://www. allianceexperts.com/en/knowledge/countries/asia/the-it-industry-inchina/#:~:text=In%20terms%20of%20spending%2C%20China's, outsourcing%20destination%20next%20to%20India Bailey, C., Madden, A., Alfes, K., & Fletcher, L. (2017). The meaning, antecedents, and outcomes of employee engagement: A narrative synthesis. Journal of Management Reviews, 19, 31–53. Baldassari, P., & Roux, J. D. (2017). Industry 4.0: Preparing for the future of work. People and Strategy, 40, 20–23. Bevilacqua, М., & Ciarapica, F. E. (2017). Human factor risk management in the process industry: A case study. Reliability Engineering and System Safety, 169, 149–159. Community.nasscom.in. (2022). Accessed June 07, 2022, from https:// community.nasscom.in/communities/bpm/technology-sector-india2021-new-world-future-virtualstrategic-review

Social Aspects of the Sustainable Development Risks: Social Support for Responsible. . . Hanh, T. H. (2021). Competitiveness of Vietnamese offshore software outsourcing companies in the Japanese market. Advances in Economics, Business and Management Research, 196, 543–558. Islam, R., Abbassi, R., Garaniya, V., & Yu, H. (2017). Development of a monograph for human error likelihood assessment in marine operations. Safety Science, 91, 33–39. Kandemir, C., & Celik, M. (2021). Determining the error producing conditions in marine engineering maintenance and operations through HFACS-MMO. Reliability Engineering and System Safety, 206, 107308. Accessed June 07, 2022, from https://ideas.repec.org/ a/eee/reensy/v206y2021ics0951832020308048.html Molino, M., Cortese, C. G., & Ghislieri, C. (2020). The promotion of technology acceptance and work engagement in Industry 4.0: From personal resources to information and training. International Journal

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of Environmental Research and Public Health, 17(7), 2438. Accessed June 07, 2022, from https://www.ncbi.nlm.nih.gov/pmc/ articles/PMC7178190/ Morag, I. (2018). Identifying the causes of human error in maintenance work in developing countries. International Journal of Industrial Ergonomics, 68, 222–230. Rizwan, H., & Bhatti, S. N. (2020). Impacts of outsourcing on quality: A case study of an electronics sector. Bahria University Journal of Management & Technology, 2(2), 16–23. Statista. (2022). Revenue of the IT services industry in Vietnam. Accessed June 07, 2022, from https://www.statista.com/statistics/ 1285982/vietnam-it-services-industry-revenue/#:~:text=In% 202020%2C%20the%20total%20revenue,steadily%20in%20the% 20past%20years

Matrix of Risks for Sustainable Development and the Universal Mechanisms of Risk Management of Implementing the SDGs Ainura A. Adieva Surkova

, Aleksandra V. Ryattel

, Pavel A. Kalinin

, and Olga A.

Abstract

JEL Codes

Purpose: Development of a universal mechanism of risk management for achieving the Sustainable Development Goals according to the matrix of the criteria of risks in this sphere at the micro-level. Design/methodology/approach: The complex method, content analysis, method of coefficients and forecasting method are used in this research. Findings: The approaches to management and analysis of the indicators that identify the companies’ Sustainable Development Goals are analysed and systematised. Based on the distinguished approaches, a universal approach in this sphere is developed, which takes into account the main positions of the authors and the concept of sustainable development. Also, the mechanisms of risk management are determined. The formulated approach ensures the integration of companies’ achievements in the sphere of sustainable development in the general system at the level of a country and the global level. Originality/value: The originality and value of this research are due to the development of the methodological framework in the sphere of management and assessment of the indicators of sustainable development components at the micro-level.

I31 · М14 · М21 · О44 · Р18 · Q53 · Q56 · Q57

Keywords

Sustainable development · Risk management · Environment · Indicators of energy efficiency · Economic indicators · Social component

A. A. Adieva (✉) International University of Kyrgyzstan, Bishkek, Kyrgyzstan A. V. Ryattel · P. A. Kalinin Vyatka State University, Kirov, Russia O. A. Surkova Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia

1

Introduction

Under the conditions of internationalisation of economies, quick development of the globalisation processes and innovative development of all spheres of management, society faces new challenges, which could be formally classified into three groups, in particular the social, environmental and economic components. The top-priority challenges within these groups are unemployment, social inequality, pollution of the world ocean, growth of CO2 emissions into the atmosphere, growth of national debt, inflation, etc. These groups of factors are interconnected. There might be observed the conditions of aggravation of the economic component, which led to the negative characteristics of the social component and improvement of the environment (growth of inflation, reduction of GDP per capita, reduction of consumption, reduction of the burden on ecology due to the decrease in the use of fuel, energy, products, etc.); conditions of the improvement of the economic component, with the corresponding optimisation of the social component and aggravation of the environmental component; conditions of improvement of all components, which are observed only in societies with a high level of responsibility for ecology and future of the world. Traditionally, in less developed agrarian countries, there is a better level of the environmental component indicators, and in developed countries, high development is observed within the economic and social components. Achievement of balance at the level of the indicators of these elements is not easy. For this, the concept of sustainable development is used. The most popular modern definition of the concept was given by the UN World Commission on Environment and Development.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_56

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The concept of macro-economic, but its methodology is translated to a lower level of economic systems. In particular, it is very important for ensuring the well-balanced development of industrial companies. Achievement of well-balanced indicators of the sustainable development components requires the use of a certain methodological framework, which is especially important under the conditions of risks that negatively influence its provision. It is necessary to create a matrix of criteria for such risks and to identify the universal mechanism of formation of risk management of implementing the SDGs in case of the emergence of threats to their achievement.

development in the context of the main spheres of the activities and the level of their implementation. Managerial parameters are systematised which are most peculiar for a specific sphere, region, country or type of companies (depending on the scale and level of integration). Within this approach, the indicators could be determined through qualitative and quantitative measuring. Within this approach, it is possible to distinguish the provisions of Janosova and Tokarčíková (2021), which include a list of the top-priority indicators of the SDGs of companies that function in the sphere of agrarian production in Slovakia. According to the authors, this list includes the following:

2

1. Elements of the environmental component: – Indicators of the negative influence on the environment (air and water pollution, waste, level of noise from various production processes). The researchers note that this category of indicators is the most substantial within the environmental component; their provision should conform to the rules and norms of the UN programme AGENDA 2030; – Indicators of energy efficiency (indicators of renewable energy and the indicators of alternative energy) (Janosova & Tokarčíková, 2021) states that this category of indicators is ranked second and third by the importance of the goals of the environmental component. A high level of implementation of these indicators is very important for such energy-intensive companies as agrarian. 2. Elements of the social component: the indicators of development of personnel; indicators of protection of employees’ health and provision of subsidies for personnel. According to the authors, these indicators are decisive in the context of a company’s sustainable development; 3. Elements of the economic component. Their criteria should be determined based on the statistical data of the reporting. These could be indicators of profitability, liquidity, financial sustainability and growth of revenues in dynamics.

Materials and Methods

The assessment of risks to achieving the Sustainable Development Goals at the micro-level was performed at the theoretical, methodological and empirical levels in the works (Allen et al., 2019; DeSteur et al., 2019; Gorman & Dzombak, 2018; Janosova & Tokarčíková, 2021; Kolk et al., 2017; Lorincova et al., 2018; Lutje & Wohlgemuth, 2020; Piwowar-Sulej, 2021; Sarango-Lalangui et al., 2018; van Zanten & van Tulder, 2021). Though at the modern state of development of scientific thought, there exists already a substantial contribution of scholars to the resolution of the issues of risk management in this direction, the need for the universalisation of the approach to the assessment and management of risks for achieving the Sustainable Development Goals is still urgent. In this research, the complex approach is used to identify the universal methodological basis for the assessment and management of risks, oriented toward the implementation of the SDGs at the micro-level. This envisages the complex study of risks of all components and inclusion of the most relevant indicators that would allow evaluating them and for which clear criterial limits would be formulated. The choice of indicators was performed with the use of content analysis. The method of coefficients was utilised for determining the estimated indicators that characterise the level of implementation and management of the SDGs. The forecasting method was used for establishing the recommended directions for risk management at the universal level.

3

Results

The approaches to determining the indicators of components (goals) of sustainable development of companies, the management of which achievement is the basis for risk management at the micro-level are as follows. First, one approach is based on the classification of the indicators of components (goals) of companies’ sustainable

The above classification of indicators covers the range of development of the main components (goals) of sustainable development. The authors did not formulate the criteria of these indicators, but their work presents the main direction of the establishment of such criteria—they could be assessed through the lens of the UN’s approach in the sphere of management and evaluation of sustainable development. In the context of the orientation toward the first scientific approach, it is necessary to note the work (DeSteur et al., 2019), in which the authors, on the whole, designate a similar list of indicators of companies’ SDGs. It is offered to introduce an additional parameter of production traditions (given

Matrix of Risks for Sustainable Development and the Universal Mechanisms of Risk. . .

the consideration of the activities of Italian wine SMEs), which, according to the authors, will allow ensuring the uniqueness of products and value added. The study of the materials of correlation of the dependence between the component (goal) of the production traditions and other components showed a negative value. That is, retaining the production traditions does not ensure ecologisation, the indicators of the social sphere (decent wages, development of personnel) and the indicators of economic effectiveness. Due to the above and in view of the importance of preserving the production traditions, the authors support the necessity to search for a balance between these components. This task could be achieved in case of a complex reconsideration of the production indicators, which would not influence the change in traditions, but would improve the level of other components and ensure sustainable development. In Lutje and Wohlgemuth (2020), the authors propose a list of indicators that characterise the management of the three components of sustainable development in the functioning of German industrial parks. An important feature of the authors’ position is the orientation toward the necessity to build a model of risk management based on the quantitative indicators only (according to the authors, they are most precise for the purposes of forecasting and analysis of the achievement of goals). Second, there is an approach that is based on determining the individualised indicators of one (two) components that affect the achievement of the attributes of the third indicator. This approach implies the formulation and provision of the chain reaction of the optimisation of sustainable development through the achievement of individualised goals, adopted within the general approach of the sustainable development concept in the context of the UN programmes. In Lorincova et al. (2018), the scholars substantiate the need for the creation of individualised indicators of human development of companies (social component), which are connected with the motivation of individual employees (departments), on which work the results of production and sales depend. In the context of this research, there is no particular focus on the statement that an increase in motivation (social component) correlates with the improvement of the indicators of the environmental component. The list of the indicators of motivation has the indicator of facilitation for healthcare, which depends on the reduction in the company’s negative influence on the environment. The authors’ positions on the formation of a system of individualised indicators, which influence each other within the sustainable development components, are important in the context of this sphere’s orientation at balance, which is achieved through the growth of positive dependence. Similar positions on the individualisation of the human development indicators, oriented toward the optimisation of the indicators of other components, are presented in Piwowar-Sulej (2021). Apart

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from the emphasis on these directions, the author proves the necessity to take innovativeness into account. Though, we think that the level of this component management can be assessed within isolated indicators of the three studied components, which is shown within the UN’s approach to managing and assessing sustainable development. Third, there is an approach that implies the management and assessment of the indicators of main components of companies’ sustainable development in the context of the programme strategy of sustainable development (integrated approach). The orientation toward the provisions of this approach is a sign of the responsible attitude of the subjects of the business community to the development of the national economy, social sphere and environment. According to this approach Sarango-Lalangui et al. (2018), formulated the methodological framework and performed an analysis of the indicators of managing the sustainability of development by the main components, on the example of SMEs in Ecuador. These categories of companies account for 99% of all economic subjects in the country; due to this, the development and assessment of the level of these indicators are necessary for Ecuador and other countries which economies have similar structural characteristics. According to the authors, the largest influence on the sustainability of development, which in its turn, affects this parameter at the national level, is performed by the following: – In the context of the economic component: compliance with laws in the sphere of taxation profit, which ensures revenues into the national budget; use of local labour and material resources, which influences the provision of national GDP from selling resources and the provision of population’s employment; growth of the quality of products (services), which influences the sales volumes and growth of GDP; growth of revenues from sales, which influences national GDP and capitalisation; – In the context of the social component: maximum implementation of employees’ initiatives in the sphere of innovations, production and organisation of labour organisation, which is a motivation and stimulation for labour; use of the policy of non-interference with leisure and free time of personnel (stimulates family and personal life of personnel); providing the opportunities for personal and professional growth of personnel (payment for advanced training); constant involvement of personnel in the mastering of new knowledge and technologies for their preparation to new conditions of the economy; material motivation. High values of these indicators demonstrate a contribution to the social goals of the country’s sustainable development; – In the sphere of environmental component: indicators of protection and care for the environment; implementation

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of specific initiatives in the sphere of reduction of material intensity and consumption of water and energy. Achievement of results within the management of these indicators influences the level of the environmental component of national sustainable development. The authors of this methodology Sarango-Lalangui et al. (2018), suggest evaluating the formulated indicators using the qualitative and quantitative indicators. On the whole, despite the fact that many spheres of management are covered together with others, the orientation of this approach allows integrating sustainable development management into this sphere at the national level.

from sales; growth of profit; growth of companies’ contribution to national GDP (share of sales revenues in GDP). Growth is treated as a positive tendency of development, absence of growth or reduction in the indicators—as aggravation of sustainable development. 4. Indicators of the social component can be assessed through the indicators of growth of personnel’s purchasing power; growth and preservation of material and non-material motivation (support for self-improvement in the professional sphere, social benefits); support for personnel’s initiatives in various spheres.

5 4

Discussion

Let us determine our approach to managing the universal mechanism of risk management of achieving the Sustainable Development Goals at the micro-level. Its formulation is based on the provisions of the studied scientific approaches and analysis of the materials of the UN programmes in the sphere of sustainable development, as well as companies’ practice. The main stage of this mechanism is forecasting the parameters of development of the given goals within the designated criteria. Accordingly, it is necessary to identify the approach to the forecast assessment of the values of the studied companies’ indicators, which would demonstrate high results and be standards of risk management. Since some studies refer to the UN approach to the policy of managing the influence on the environment as the basic one, we assume that it is possible to adapt it in the following form: 1. Indicators of achievement of the threshold norms of environment pollution, adopted within national and supranational legislation, can be evaluated according to the UN approach to the assessment of these parameters: 75–100 point—maximum level of the compliance with the requirement; 45–74 points—medium level; 30–44 points—low level; 0–32—very low level; 2. Indicators of energy efficiency (indicators of renewable energy and indicators of alternative energy) can be determined as calculation of the share of each type of energy in the total volume of consumer energy; evaluation of energy efficiency. Criteria of energy efficiency management are as follows: if the share of each type of energy in the total volume of consumed energy is within 75–100%, we note high effectiveness, 45–74% - medium, 30–44% - low, 0–32% - very low. 3. As for the indicators of the economic component, it is suggested to evaluate the following: growth of revenues

Conclusion

The modern theoretical and methodological approaches to risk management of companies’ activities develop according to the changes in the concepts of society’s development at the national and global levels. In the age of globalisation, the concept of sustainable development moved into the foreground; it includes the benchmarks of the three components: environmental, social and economic. Companies cannot move away from these benchmarks by simply relocating their business to other countries, because the implementation of the Sustainable Development Goals became of top priority for most countries of the world. The inclusion of the system of risk management in the sphere of achieving the Sustainable Development Goals of companies in the system of this direction at the national level demonstrates the responsible attitude of these subjects toward the development of the country. The transformation of benchmarks of the country’s sustainable development is the indicator of the change in the system of risk management in this direction. An example of this is China’s development in the sphere of ecologisation, ensured due to the companies’ adopting the government’s course on the use of eco-friendly materials and energy efficiency.

References Allen, C., Metternicht, G., & Wiedmann, T. (2019). Prioritising SDG targets: Assessing baselines, gaps and interlinkages. Sustainability Science, 14(2), 421–438. DeSteur, H., Temmerman, H., Gellznch, X., & Canavari, M. (2019). Drivers, adoption, and evaluation of sustainability practice in Italian wine SMEs. Business Strategy and Environment, 29(2), 744–762. Gorman, M. R., & Dzombak, D. A. (2018). A review of sustainable mining and resource management: Transitioning from the life cycle of the mine to the life cycle of the mineral. Resources, Conservation and Recycling, 137, 281–291. Janosova, Р., & Tokarčíková, Е. (2021). Management of sustainability, its measurement and relevance in the Enterprise. Hradec Economic Days. Accessed June 09, 2022, from https://www.researchgate.net/ publication/350932251_Management_of_Sustainability_its_Mea surement_and_Relevance_in_the_Enterprise

Matrix of Risks for Sustainable Development and the Universal Mechanisms of Risk. . . Kolk, A., Kourula, A., & Pisani, N. (2017). Multinational enterprises and the sustainable development goals: What do we know and how to proceed? Transnational Corporations, 24(3), 9–32. Lorincova, S., Hitka, M., Starchon, P., Stachova, K. (2018). Strategic instrument for sustainability of human resource management in small and medium-sized enterprises using management data. Sustainability, 10(10). Accessed June 09, 2022, from https://www. mdpi.com/2071-1050/10/10/3687 Lutje, A., Wohlgemuth, V. (2020). Tracking sustainability targets with quantitative indicator Systems for Performance Measurement of industrial Symbiosis in industrial parks. Administrative Science, 10(1). Accessed June 09, 2022, from https://www.mdpi.com/20763387/10/1/3

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Piwowar-Sulej, K. (2021). Human resources development as an element of sustainable HRM – With the focus on production engineers. Journal of Cleaner Production, 278, 124008. Accessed June 09, 2022, from https://www.sciencedirect.com/science/article/pii/ S0959652620340531 Sarango-Lalangui, Р., Álvarez-García, J., & de la Cruz del Río-Rama, М. (2018). Sustainable practices in small and medium-sized Enterprises in Ecuador. Sustainability, 10, 2105. Accessed June 09, 2022, from https://www.mdpi.com/2071-1050/10/6/2105/pdf van Zanten, J. A., & van Tulder, R. (2021). Analyzing companies’ interactions with the sustainable development goals through network analysis: Four corporate sustainability imperatives. Business Strategy and the Environment, 30, 2396–2420.

Risks of Region’s Sustainable Development: A Systemic View from the Position of Society, Economy and Law Talgat T. Talantbekov , Alexey V. Tolmachev and Natalya G. Balibardina

, Dmitry A. Loginov

,

Abstract

Keywords

This work is aimed at formation of a systems view of the risks of the sustainable development of the region from the position of society, economy and law. These risks are measured through the analysis of the dynamics of change in the values of the indicators of the quality of life in 2023, compared to 2022, according to the statistics by Numbeo (using horizontal analysis). Regression analysis is utilised to model the contribution of the factors of society, economy and law to the sustainable development of a region. It is discovered—on the example of meso level economic systems with different quality of life—that all factors from the position of society, economy and law favourably influenced the sustainable development of these systems. This allowed preserving the state of the climate in 2023 at the 2022 level and reducing the environmental pollution. Based on the international experience of 2022–2023, we elaborate on the prospects and offer recommendations for the achievement of carbon neutrality by 2050 due to the systemic management of the factors of society, economy and law for regions’ sustainable development (as meso level economic systems). The practical importance of the conclusions and recommendations lies in their providing new tools for risk management, which is based on the systemic management of the factors of the quality of life from the position of society, economy and law.

Risks · Sustainable development · Region · Society · Economy · Law · Meso economy · Carbon neutrality · Waste reduction

T. T. Talantbekov (✉) Batken State University, Batken, Kyrgyzstan A. V. Tolmachev Kuban State Agrarian University named after I.T. Trubilin, Krasnodar, Russia D. A. Loginov Vyatka State University, Kirov, Russia e-mail: [email protected] N. G. Balibardina Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia

JEL Codes

D81 · O18 · Q01 · Q54 · Q56 · R13 · R58

1

Introduction

In the Decade of Action, sustainable development is a priority for economic systems of all levels. Sustainable development is usually treated as economic systems’ position within the conventional bounds of the totality of Pareto efficiencies, at which socio-economic development is connected with maximum allowable environmental costs and thus does not deal critical damage to the environment. This allows avoiding environmental disasters. The sustainable development concept is based on the idea of peaceful co-existence of society and nature. At the meso level, economic systems are presented by regions, cities and other territories as parts of countries. At this level, the problems of environmental pollution and climate change are manifested most clearly. This is due to the situation that at the macro level and, especially, global level, the environmental costs of the socio-economic development, as well as the state of the environment, are very different among the constituent elements. These differences make the development of common regulatory solutions very difficult. Unlike this, the environment is common and similar at the meso level, which facilitates the development of non-contradictory and most effective state policy of sustainable development management. The problem is that an unfavourable context of sustainable development formed in

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_57

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recent years. Manifestations of climate change become more serious and are widely expressed. The scale of environmental pollution (e.g., drought, water-logging, cold snaps) is very large and leads to disorders in the functioning of ecosystems (e.g., reduction of biodiversity). The COVID-19 pandemic, accompanied by lockdowns and social distancing measures, had a divisive effect on modern economic systems, which hinders the sustainable development of regions. This paper aims to solve the problem posed and seeks the goal of forming a systemic view of the risks of the sustainable development of the region from the position of society, economy and law.

indicated in Badapalli et al. (2022), Ferreira et al. (2023), Liu et al. (2022), Rehman and Holý (2022), the achievement of carbon neutrality as the key priority of region’s sustainable development requires direct measures of the green economy development. However, the posed research questions require in-depth analysis. To specify answers to them, this paper studies the risks of the region's sustainable development and management from the position of society, economy and law with reliance on the latest international experience.

3 2

Literature Review

Sustainable development at the meso level was studied in detail in Popkova and Shi (2022), Popkova et al. (2020). In these works, the authors point to the absence of essential differences between region and city in the aspect of managing the sustainable development. The risks to the region’s sustainable development—were analysed in Shabaltina et al. (2022), Turginbayeva and Abildaev (2013) and include (1) risks of aggravation of the result (aggravation of climate and growth of environmental pollution); (2) risks of the unfavourable influence of the factors of society, economy and law on region’s sustainable development. The literature review allows stating that in-depth analysis of the management of region’s sustainable development (as an economic system at the meso level) was performed. However, we also discovered that theoretical analysis of the issues considered dominates over the practical development of these issues. Insufficient research on the empirical experience of the sustainable development of the region is a literature gap. This paper’s aim is to deal with this gap. The three following research questions (RQ) are set. RQ1: How did the risks of sustainable development in regions change in 2023? The authors of Christensen (2023), Forkuor and Korah (2023), Rastogi et al. (2023) state that sustainable development risks in regions grew in 2023 against the background of the general crisis context in the economy: both the result and the factors of society, economy and law, which define the result, worsened. RQ2: How do society, economy and law raise the level of the sustainable development of a region? (Haque et al., 2022; Soltani, 2022; Walper et al., 2022) state that society, economy and law raise the level of the sustainable development of a region in isolation, separately. RQ3: How can carbon neutrality as the key priority of the region’s sustainable development be achieved? As

Materials and Method

The subject area of this research is the sustainable development of meso level economic systems. Examples of such systems are regions and cities between which there is no essential difference in the context of this research. Statistics on regions are usually national—i.e., the statistics are limited by separate countries and are incompatible for different countries. Therefore, the information and empirical base in this paper is the statistics on cities from the materials of Numbeo (2023) on the quality of life. The indicators used in this research include as the pollution index and climate index. Risks to the region’s development from the position of deterioration of results are connected with an increase in the pollution index and a reduction of the climate index. For the fullest coverage of the international experience, we included in the sample four meso level economic systems with very high quality of life in 2023—The Hague (Den Haag), Netherlands; Vienna, Austria; Zurich, Switzerland; Luxembourg, Luxembourg; four systems with high quality of life—Nizhny Novgorod, Russia; Pretoria, South Africa; Astana (Nur-Sultan), Kazakhstan; Shenzhen, China; and four systems with moderate quality of life—Rio de Janeiro, Brazil; Ho Chi Minh City, Vietnam; Caracas, Venezuela; Tehran, Iran. The statistical data on the sustainable development of meso level economic systems in 2022–2023 are shown in Table 1. The risks to region’s development from the position of society, economy and law are measured through the analysis of the dynamics of change in the values of the selected variables (using horizontal analysis). To search for an answer to RQ1, we assess the change in the indicators of regions’ sustainable development in 2023 compared to 2022. To search for an answer to RQ2, we use regression analysis and find the contribution of the factors from society, economy and law to the sustainable development of a region in the model R = F(f). To search for an answer to RQ3, we use the regression model and find the Pareto-optimal solution

Source: Systematized by the authors using the materials of Numbeo (2023)

City The Hague (Den Haag), Netherlands Vienna, Austria Zurich, Switzerland Luxembourg, Luxembourg Nizhny Novgorod, Russia Pretoria, South Africa Astana (Nur-Sultan), Kazakhstan Shenzhen, China Rio de Janeiro, Brazil Ho Chi Minh City, Vietnam Caracas, Venezuela Tehran, Iran

Quality of Life Index 2022 2023 191.4 217.1 181.8 199.6 200.9 195.3 178.5 193.3 138.1 143.7 136 138.7 122.7 124.7 103.2 115.8 64.1 69.4 68.6 65.6 75.7 64.3 46.3 61.6

Purchasing Power Index (f1) 2022 2023 88.5 129.9 79.6 112.9 129.8 122.9 100.2 118.2 34.9 41.3 87.3 92.9 41 47.3 69 80.9 18.9 23.2 30.9 30.1 15.9 11 14.5 18.9 Safety Index (f2) 2022 2023 74.6 78.8 73.5 73.1 83.2 81.7 70.3 71.3 68.3 71.3 18 18 66.8 66.1 67 71.1 22.4 22.4 46.2 47.5 15.7 16.4 45.1 44.1

Health Care Index (f3) 2022 2023 77.9 80 78.6 79.2 74.2 74.1 72.8 77 74.3 75.7 66.5 66.1 67.3 67.3 59.6 58.4 44.8 45 59.8 59.9 38.4 38.7 52.7 52.6

Table 1 Statistical data on sustainable development of economic systems (meso level) in 2022–2023

Cost of Living Index (f4) 2022 2023 73.9 62.7 68.4 61.8 131.2 120.8 83 74.6 33.9 37.9 42.8 37.7 30.3 29.4 51.1 44.1 36.7 38.2 39 37.2 45.3 42.6 31.5 33.2

Property Price to Income Ratio (f5) 2022 2023 7.2 5.9 14 11.5 7.9 11.2 13.5 12.6 13.8 15.2 2.1 1.9 7.9 7.7 44 40.1 27.6 23.8 30.6 34.5 15.9 26.5 43 29

Traffic Commute Time Index (f6) 2022 2023 28.9 22.9 26.3 24.5 32.9 32.7 34.1 30 29.2 27.6 45.5 45.5 31.9 32.3 36.5 35.7 51.1 51.3 31.8 31.4 34.9 34.1 53.1 52.9

Pollution Index (R1) 2022 2023 20.5 19.2 17.3 16.7 17.9 17.8 21.7 19.4 34.7 31.7 55.9 56 51.4 51.8 62.4 60.5 67.9 67.7 92.3 92.1 74 74 81.3 81

Climate Index (R2) 2022 2023 90.6 90.6 81.8 81.8 81.5 81.5 82.6 82.6 45.5 45.5 95.8 95.8 21.3 21.3 81.8 81.8 88.2 88.2 63.4 63.4 99.9 99.9 71 71

Risks of Region’s Sustainable Development: A Systemic View from the Position. . . 329

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points

150

140 120 100 80 60 40 20 0

2022 2023 Correlation Growth

100 50 %

Fig. 1 Horizontal and correlation analysis of risks of the sustainable development of meso level economic systems in 2022–2023. Source: Developed by the authors

0 -50

Qualit y of Life Index

Cost Healt Purch of h asing Safety Livin Power Index Care g Index Index Index

125.61 132.43 -95.96 5.43

59.21 69.13 -83.28 16.75

54.26 55.15 -70.65 1.64

63.91 64.5 -83.54 0.93

55.59 51.68 -67.52 -7.03

Prope rty Price to Incom e Ratio 18.96 18.33 68.49 -3.34

-100 Traffi c Pollut Clima Com ion te mute Index Index Time Index 36.35 49.78 75.28 35.08 48.99 75.28 62.08 100 -4.27 -3.51 -1.57 0

Source Developed by the authors

of factors at which carbon neutrality is achieved—as the key priority of the region’s sustainable development according to the Paris Agreement (United Nations (UN), 2023).

4

Results

To find the risks to the region’s development from the position of society, economy and law, we performed their horizontal and correlation analysis in 2022–2023 (Fig. 1). Results received in Fig. 1 demonstrated that the climate index in 2023 stayed at the 2023 level. At the same time, the pollution index dropped down by 1.57%—from 49.78 points in 2022 to 48.99 points. This is a sign of an improvement in the results in sustainable development of meso level economic systems. All factors of society, economy and law demonstrated a close positive connection with the pollution index. Its correlation with the purchasing power index was 83.28%, with the safety index—70.65%, with the health care index—85.54%, with the cost of living index—67.52%, with the property price to income ratio—68.49%, and with the traffic commute time index—62.08%. To specify the connection between the variable, we performed a factor analysis of the sustainable development of economic systems (meso level) based on a unified data array for 2022–2023 (regression analysis was utilised). As a result, the following equation of multiple linear regression was obtained: R1 = 84:5795 - 0:1000
f 1 - 0:4160
f 2 - 0:1869
f 3 - 0:1744
f 4 þ 0:8151
f 5 þ 0:0039
f 6

ð1Þ

In the obtained econometric model (1), the change of the pollution index is by 92.20% explained by the influence of the considered factor variables. Significance of F = 3,7*10-

—therefore, Eq. (1) conforms to the highest level of significance: 0.001. In it, F-table (for 24 observations and 6 factor variables) is 6.5625. F-observed is 16.0711—it is higher than F-table. Therefore, the F-test has been passed. Therefore, model (1) is robust at the significance level of 0.001. Based on model (1), we perform a multifactorial optimisation of the pollution index with the least-squares method. Thus, we discovered the prospect of achieving carbon neutrality by 2050 (Fig. 2). As shown in Fig. 2, the pollution index acquires a zero value (no damage to the environment is dealt) with the following possible Pareto efficiency of the factors of society, economy and law: an increase in the purchasing power index by 34.59% (from 69.13 points in 2023 up to 93.04 points); an increase in the safety index by 123.22% (from 55.15 points in 2023 up to 123.11 points); an increase in the health care index by 61.55% (from 64.50 points in 2023 up to 104.20 points); unchanged value of the cost of living index (51.68 points); a decrease in the property price to income ratio by 71.26% (from 18.33 points in 2023 down to 5.27 points); a decrease in the traffic commute time index by 0.67% (from 35.08 points in 2023 down to 34.84 points). 6

5

Discussion

This articles contributes to the literature through the expansion of the scientific provisions of the concept of the managing the sustainable development (meso level). Answers to all posed research questions were found. They are given in Table 2—in comparison with the existing literature. As shown in Table 2, as opposed to Christensen (2023), Forkuor and Korah (2023), Rastogi et al. (2023), we proved—within RQ1—that the risks of sustainable development in regions in 2023 did not grow but reduced: the result

Risks of Region’s Sustainable Development: A Systemic View from the Position. . .

331

Fig. 2 Prospect for achieving carbon neutrality by 2050. Source: Developed by the authors

150

123.11 123.22

140 120 100 80 60

104.2

93.04 69.13

100

61.55

50

34.59 64.5

55.15

51.68

-0.67

51.68

35.08 34.84 18.33 -71.26 5.27

0

40 20 0

Purchasing Safety Index Health Care Cost of Power Index Index Living Index

Property Price to Income Ratio

Traffic Commute Time Index

0

48.99 -100 0

-50 -100 -150

Pollution Index

Value in 2023, points Recommended value, points

Recommended change of the value compared to 2023, %

Source Developed by the authors

Table 2 Answers to the research questions posed compared to the existing literature Research questions (RQs) RQ1: How did the risks of sustainable development in regions change in 2023? RQ2: How do society, economy and law improve the sustainable development of a region? RQ3: How can carbon neutrality— as the key priority of the region’s sustainable development—be achieved?

Existing literature Answers to RQ Increased (the result and factors of society, economy and law that define it worsened) Is isolation, separately: society, economy and law Only through direct measures of development of the green economy

Sources Christensen (2023), Forkuor and Korah (2023), Rastogi et al. (2023) Haque et al. (2022), Soltani (2022), Walper et al. (2022) Badapalli et al. (2022), Ferreira et al. (2023), Liu et al. (2022), Rehman and Holý (2022)

New answers that were received in the paper Decreased: the result (pollution index) grew by 1.57%, and the factors of society, economy and law that define it grew by 5.52% on average Jointly, systemically: society, economy and law Also through indirect measures in society, economy and law, aimed at an increase in the quality of life

Source: Developed by the authors

(pollution index) grew by 1.57%, and the factors of society, economy and law that define it grew by 5.52% on average. As opposed to Haque et al. (2022), Soltani (2022), Walper et al. (2022), we proved—within RQ2—that society, economy and law improve the sustainable development of a region not separately (in isolation), but jointly and systemically. As opposed to Badapalli et al. (2022), Ferreira et al. (2023), Liu et al. (2022), Rehman and Holý (2022), we proved—within RQ3—that achievement of carbon neutrality as the key priority of region’s sustainable development is possible not only through direct measures of green economy development but also through indirect measures in society, economy and law, aimed at an improvement in life quality.

6

Conclusion

In this paper, we formed a systemic view of the risks to the region’s development from the position of society, economy and law. We discovered that all factors of sustainable

development from the position of society, economy and law influenced positively the sustainable development of these systems. Due to this—despite the unfavourable conditions for green economy development—it was possible to preserve the state of the climate in 2023 at the 2022 level and to reduce environmental pollution by 1.57%. Based on the international experience in 2022–2023, we revealed prospects and offered recommendations to achieve carbon neutrality by 2050 by means of the systemic management of the factors of society, economy and law for regions’ sustainable development (meso level economic systems). The theoretical significance of this paper is that it systematized the latest empirical experience of the region’s sustainable development and comprehensively presented its risks from the position of society, economy and law. The practical value of conclusions and recommendations made in this research lies in their providing new tools for the risk management of the region’s development (in the context of sustainability), based on the systemic management of the

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factors of lie quality from the position of society, economy and law.

References Badapalli, P. K., Nakkala, A. B., Kottala, R. B., & Gugulothu, S. (2022). Geo environmental green growth towards sustainable development in semi-arid regions using physicochemical and geospatial approaches. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-022-24588-z Christensen, L. D. (2023). A Bayesian game of resource exploitation in hinterland regions: Modelling scenarios for sustainable development. Environment, Development and Sustainability, 25(1), 277–296. https://doi.org/10.1007/s10668-021-02052-1 Ferreira, I., Corrêa, A., & Cruz, C. (2023). Sustainable production of ectomycorrhizal fungi in the Mediterranean region to support the European Green Deal. Plants People Planet, 5(1), 14–26. https://doi. org/10.1002/ppp3.10265 Forkuor, D., & Korah, A. (2023). NGOs and sustainable rural development: Experience from Upper West Region of Ghana. Environment, Development and Sustainability, 25(1), 351–374. https://doi.org/10. 1007/s10668-021-02057-w Haque, M. O., Rahman, N. N., Tabassum, N., & Aman, J. (2022). Evaluating the daylighting and energy performance of container housing systems in coastal regions: An Iterative modeling approach. Advances in Science, Technology and Innovation, 2022, 153–165. https://doi.org/10.1007/978-3-031-11232-4_13 Liu, Y., Wen, Q., Chandio, A. A., Chen, L., & Gan, L. (2022). Investment risk analysis for green and sustainable planning of rural family: A case study of Tibetan Region. Sustainability (Switzerland), 14(19), 11822. https://doi.org/10.3390/su141911822 Numbeo. (2023). Quality of life index by city 2022–2023. Accessed January 26, 2023, from https://www.numbeo.com/quality-of-life/ rankings.jsp?title=2023 Popkova, E. G., & Shi, X. (2022). Economics of climate change: Global trends, country specifics and digital perspectives of climate action.

T. T. Talantbekov et al. Frontiers in Environmental Economics, 1, 935368. https://doi.org/ 10.3389/frevc.2022.935368 Popkova, E. G., Ekimova, K. V., & Sergi, B. S. (2020). Data set of balance of Russia’s regional economy in 2005–2024 based on the methodology of calculation of “underdevelopment whirlpools”. Data in Brief, 31, 105821. https://doi.org/10.1016/j.dib.2020. 105821 Rastogi, R., Chaturvedi, D. K., Mishra, T., et al. (2023). Examining the AQI with effect of agnihotra in NCR region: Extracting knowledge for sustainable society and holistic development with healthcare 5.0. Smart Innovation, Systems and Technologies, 317, 271–280. https:// doi.org/10.1007/978-981-19-6068-0_27 Rehman, S., & Holý, O. (2022). Is green and sustainable technological innovation a potential driver of environmental performance? An empirical investigation across the ASEAN region. Frontiers in Environmental Science, 10, 958203. https://doi.org/10.3389/fenvs.2022. 958203 Shabaltina, L. V., Shchukina, N. V., Surkova, O. A., & Smetanina, A. I. (2022). A framework for reconstructive digital farming for areas with unfavourable climatic conditions for agricultural entrepreneurship. Environmental Footprints and Eco-Design of Products and Processes, 2022, 215–222. https://doi.org/10.1007/978-981-191125-5_25 Soltani, L. (2022). Farmers’ willingness to accept compensation for crops conversion programs in semi-arid regions of Tunisia: The case study of Nabeul governorate. Advances in Science, Technology and Innovation, 2022, 261–264. https://doi.org/10.1007/978-3-03100808-5_60 Turginbayeva, A. N., & Abildaev, S. T. (2013). Quantitative assessment of regional economy competitiveness (Republic of Kazakhstan case study). Actual Problems of Economics, 146(8), 477–485. United Nations (UN). (2023). The Paris Agreement at COP21 in Paris on 12 December 2015). Accessed January 26, 2023, from https:// www.un.org/ru/climatechange/paris-agreement Walper, C., Braun, A., & Hochschild, V. (2022). A satellite-based framework to investigate the impact of sand dams on landscapes in semi-arid regions. Advances in Science, Technology and Innovation, 2022, 287–290. https://doi.org/10.1007/978-3-031-00808-5_66

The Risks of Implementing and Managing the SDGs in the Company’s Activities: A Case Study by the Example of the Largest Companies of Russia Olga A. Pecherskaya , Nadezhda V. Palesheva and Larisa V. Shabaltina

, Marina N. Kiseleva

,

Abstract

Keywords

This chapter’s goal is to identify the types of risks of implementing and managing the Sustainable Development Goals of the largest companies in Russia under the modern conditions of the national economy’s transformation. The method of systematisation, statistical method and functional method are used. We reveal a high dependence of the Russian economy on the results of the activities of the largest companies, which function within the main spheres. This is a specific feature of the Russian economy’s structure at the modern stage; risks that emerge in the activities of companies of these categories are similar to risks that hinder sustainable development at the national level. Analysis of the classification and characteristics of the risks of achieving the Sustainable Development Goals of these subjects has shown the necessity to improve the system of their management. The developed directions in this sphere are aimed at solving this problem and taking into account the prospects for business in Russia. The scientific novelty of this research consists in the classification of the risks of achieving the benchmarks of sustainable development of the largest subjects of the Russian economy and; the development of the directions of their management, given the modern specifics of the formation of factors (threats) within the key spheres of functioning.

Risks of achieving the SDGs · Largest Russian companies · Risks of logistics · Ecologisation · Financial risks · Economic growth · Import substitution

O. A. Pecherskaya (✉) Voronezh State University of Forestry and Technologies named after G.F. Morozov, Voronezh, Russia N. V. Palesheva Vyatka State University, Kirov, Russia M. N. Kiseleva Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia

JEL Codes

О12 · О14 · О17 · О38 · Р42 · Q28 · Q51

1

Introduction

In the current economic conditions, the largest companies of Russia face the processes of intense transformations and global change, which lead to the uncertainty and inequality in the development of markets, absence of the resource, technological and personnel base and commonness of goals with partners, and ignoring the interests of partnership’s participants. Since companies are in the difficult conditions, their functioning requires the changes in the approaches to formation and implementation of their strategic goals in different spheres, since their achievement with the use of the method of economic growth is insufficient, quick development of production can take place simultaneously with low social standards, ineffective economic methods and threats to ecology (environment pollution). In the process of studying the structure of the interaction of companies, markets, logistics and reproduction, it is necessary to dwell on the regularities of the grouping of economic systems by objects, types of environments, processes and projects. This will allow building a well-balanced structure of the integration connections between companies and other types of socioeconomic systems, which, under the conditions of constant changes, will ensure the sustainable development of companies.

L. V. Shabaltina Plekhanov Russian University of Economics, Moscow, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_58

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Balance, as the basis of managing all spheres of companies’ functioning, is the foundation of the conceptual theory of sustainable development. It is adopted within the programme documents of the UN members. Its key aspects are important indicators that allow ensuring effectiveness in all spheres of companies’ activities and their prospects. Given the above, achievement of the Sustainable Development Goals of companies requires an effective approach to management, which would allow avoiding and reducing the impact of risks. Orientation toward a certain form of decision-making will allow for timely and adequate reaction to possible challenges for the sustainable development of companies. The purpose of this research is to identify the types of risks of implementing and managing the Sustainable Development Goals of the largest companies in Russia under the modern conditions of transformation of the national economy. For this, the following tasks are solved: systematising scientific approaches to the assessment of risks of this type; formulating the directions of managing these risks for achieving the Sustainable Development Goals of the selected companies of Russia.

2

Materials and Method

The issues of companies’ SDGs and risks that influence their achievement, as well as the directions of optimisation management, have been studied in Berzon et al. (2022), Bozo et al. (2021), Golikova and Kuznetsov (2017), Gudkova (2020), Kuznetsov (2019), Li and Li (2022), Makarova et al. (2021), Maksimova-Kulieva and Lepetiukh (2018), Mochalova et al. (2019), Verstina et al. (2018). Analysis of the provisions of the above works has shown that, at the current stage, there is no complex and universal approach to assessing the main types of risks of achieving the Sustainable Development Goals or a model of managing them within the functioning of the largest companies of Russia. The following methods are used in this research: method of systematisation—to classify the authors’ approaches to the types of risks of the given category; statistical method—to assess the data of statistics on the indicators of sustainable development of the largest companies of Russia; functional method—to plan managerial decisions on risk management of achieving the SDGs of these companies. In this work, the analytical and statistical materials on the development of the selected largest companies in Russia are used: materials of analysis of the state of these subjects’ activities in the sphere of formation and implementation of the goals of the given type and management of risk that are

connected with their achievement; data of companies’ reporting; scientific papers with the materials on the studied direction.

3

Results

Based on the research of scientific materials, let us formulate the systematisation of approaches to the assessment of the types of risks connected with the achievement of the benchmarks of sustainable development of the largest companies in Russia. It is possible to distinguish 500 subjects that define the development of the Russian economy (volume of sales of products (services) accounts for more than 80% of GDP) (RBC.RU, 2019). It is possible to state that the structure of the Russian economy is peculiar for the specifics of orientation toward the maximisation of the business environment, which is mainly predetermined by the historical features of the formation of certain spheres. While in many Western countries (developed and developing), the economies are oriented toward small, medium and microbusiness, Russia functions within the scaling of the economy toward the enlargement of companies. Taking this into account, these companies reach socially important goals and form them primarily within the national course of sustainable development. The influence of threats to the implementation of such goals is a negative factor for the companies and the country on the whole. There is an approach connected with the classification of risks of reduction of financial stability, which is required for internal investing in the achievement of the benchmarks of sustainable development (financial risks of implementation). In the context of the orientation toward this approach, it is necessary to note the provisions of Berzon et al. (2022), which contain a structure of risks of this type. The authors substantiate the dependence of the change (aggravation) on the level of the social component of sustainable development and this indicator on the whole on the influence of the growth of financial risks, which include: the risk of reduction of sales of products (services); risks of reduction of profit; risk of reduction of the volume of assets (resources); risk of reduction of companies’ capitalisation. The results of the analysis were obtained based on the research on the functioning of eleven companies of Russia (top-20 of the 500 largest companies of Russia) over 2019–2021 (Gazprom, Rosneft, Lukoil, Novatek, Transneft, Tatneft, Novolipetsk Steel, Polyus, Magnitogorsk Iron & Steel, Alrosa and Polymetal International). According to the obtained results, the authors determined that the largest negative influence on the achievement of the Sustainable Development Goals in these companies was connected with the growth of the risk of

The Risks of Implementing and Managing the SDGs in the Company’s Activities: A. . .

reduction of the volume of sales of products (services) and growth of the risk of resources’ reduction. Researchers do not focus on the reduction of internal financing of ecologisation, though this direction was developed under the conditions of functioning of all mentioned economic subjects. Analysis of the characteristics of the influence of financial risks, presented in Berzon et al. (2022), allows stating that there is an additional effect of the economic risk of ineffective import substitution. This type of risks directly influences the financial risks and the aggravation of the achievement of the main components of sustainable development of large, medium and small companies of Russia. This category of risks is studied in Kuznetsov (2019), which is devoted to the assessment of managing the companies’ sustainable development. This type of risks poses barriers to sustainable development at the level of Russian companies and the level of the state. The influence of the risk of ineffective import substitution is connected to the absence of effective managerial decisions in the sphere of the search for a replacement for equipment, materials and resources in all spheres. There is “manual regulation” by the state, which implies the support for companies that suffered the most from the necessity to implement import substitution. Orientation toward this method does not stimulate the real support for sustainable development, but only temporarily reduces the effect of the negative consequences on the social, environmental and economic sectors of companies. In Bozo et al. (2021) and Li and Li (2022), it is revealed that this risk belongs to the external factors of the negative influence on the aggravation of sustainable development; though companies have certain possibilities to manage it, the effectiveness of problem resolution depends on the strategies of the state and involvement of all interested parties in this process, as well as the implementation of the programmes of internal protectionism. In Golikova and Kuznetsov (2017), the authors substantiate that the most negative influence of the risk of the ineffectiveness of import substitution is observed in the largest companies of Russia in the sphere of production, mining industry and energetics. In this sphere, technological provision through internal resources was not ensured. The approach that is connected with the manual regulation of the economy (so-called “manual” regulation) predetermines the emergence of risks in achieving the following SDGs: SDG 1 (No poverty), SDG 2 (Zero hunger), SDG 3 (Good health and well-being), SDG 4 (Quality education), SDG 6 (Clean water and sanitation) and SDG 10 (Reduced inequalities). Such dependence is caused by the fact that the state spends budget assets to support non-competitive productions (spheres), which products are in demand only in the domestic market; at that, the necessity for expenditures for the goals that identify sustainability (in this case, in the sphere of human development), is ignored. Manual support for the activities of sectors and

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companies leads to the emergence of risks of the implementation of the UN SDGs. Also, this approach, predetermined by manual support for the economy, leads to the emergence of risks for the achievement of SDG 9 (Industry, innovation and infrastructure). The state’s interference reduces the competitive policy, while the principles of market regulation and the orientation toward the innovative driver of the economic spheres’ development are partially ignored. There is an approach that distinguishes risks related to changes in the institutional structures that provide logistical provision of supply of goods (materials, resources), services of storing and delivery of products between storages and to customers (risks of destruction of logistics or risks of logistics). Within the emphasis on risks of logistics, the authors of Maksimova-Kulieva and Lepetiukh (2018) point to the fact that their emergence is connected with a range of factors, which include as follows: – Absence of trained personnel in the sphere of development and making of effective (often non-standard) decisions on the organisation of processes given constantly changing conditions; – Low level of logistical chains in Russia, which does not allow the largest companies to perform continuous operations with goods; – Destruction of logistical ties with partner companies due to the influence of unpredictable events (pandemic, growth of inflation) or bankruptcy of the partnership participants, which perform logistical functions. The authors of Gudkova (2020), Makarova et al. (2021), Mochalova et al. (2019), and Verstina et al. (2018) note a significant impact of the risks of destruction of logistics on the ecologisation of processes, and aggravation of the negative influence on the environment of territories (one of the components of sustainable development). Such negative influence is peculiar for the functioning of the largest companies that faced the unpredicted necessity to change a partner who performs logistical functions; they chose new interactions based on the criteria of economic effectiveness and do not orient toward the priority of supporting the balance of economy and ecology.

4

Discussion

The systematisation of risks of achieving the Sustainable Development Goals allowed developing and formulating the main directions of their management at the level of the largest companies of Russia, which include the following: – Assessment and implementation of the opportunities for long-term provision with resources and technologies that

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are a necessity for the continuous functioning of production processes. The search for such opportunities can be performed with the help of outsourcing, and implementation—with the help of public-private partnerships. These opportunities may include investments in the intensive production of the necessary equipment technologies and materials; investments in restoration of production which profile allows manufacturing the necessary assets; conclusion of partnership agreements with partner states in the trade and industrial sphere on the supply of required resources. This measure will allow ensuring the growth of the volumes of production and revenues from selling products, which will ensure the perspective for implementing the main Sustainable Development Goals within the environmental and social components and the growth of the level of economic goals’ achievement. This direction will allow neutralising the risks of financial character and the risks of the ineffectiveness of import substitution; – optimisation of logistical ties given the orientation toward partnership with reliable partners, monitoring of their readiness to external market and financial challenges; creation of logistical channels that are based on a full production cycle. To achieve the efficiency of logistical operations and reduction of the negative consequences of failures in this sphere, it is proposed to create the systems of continuous monitoring of the potential of partners that implement these procedures; constant control over these companies observing the threshold criteria within these systems; search for the effective directions of logistical interaction in view of the change in the market and financial conditions; – Development and correction of the strategies of development given the modern realities of the technological potential, which could be ensured in the factual conditions of functioning, with the provision of achievement of balance of all SDGs, which implementation is the fundamental basis for further activities within the selected sphere and territories; – reconsideration of the strategies of development in favour of the institutional division of integration business structures during a crisis, which is especially important for large participants of associations (innovation networks, clusters, associations), which, within the contractual relations, adopted the obligations on ensuring the constant production load for small participants, investments in their development in different spheres, and support for the activities during forced idle periods. That is, there is a possibility to change the course of the Russian economy toward the development of small, medium and micro companies as the basis of the key spheres. Such an approach may facilitate the support for

O. A. Pecherskaya et al.

social standards ecologisation in the sphere of material use and organisation of main processes. Of course, such decisions are impossible for large integration structures without the coordination with the state, consultations and adoption of the corresponding programme documents for support for business in the period of the transformations of this category. In this case, there appears risk to the state’s implementation of SDG 12 (Responsible production and consumption) and SDG 7 (Affordable and clean energy). Due to the reduction of the entrepreneurial infrastructure in the sphere of logistics and growth of services’ prices in this direction due to the decrease in the offer, there takes place a refusal from the orientation toward the responsible management of the logistical sphere, including in the context of waste reduction, ecologisation, energy-saving and use of clean energy.

5

Conclusion

We revealed the categories of risks that have the largest influence on the achievement of the main components of sustainable development of the main economic subjects of Russia. These risks have an internal and external nature. The considered risks are connected with the financial and economic features of the development of the state, which are formed in the process of formation of the main spheres and the period of the transformations of the economic position of Russia in international markets. The described directions of managing the reduction of the influence of mentioned risks on the main spheres of sustainable development of the studied subjects were developed with the orientation toward the perspective transformation of the main processes of development of entrepreneurship and industry of the country. The list of optimisation solutions could be expanded or changed due to the large changeability of the market environment. The key direction of this improvement is solving the problem of import substitution and logistical provision of industrial companies of Russia. Implementation of these directions will allow the largest companies in the country to function within other organisational and institutional forms, ensuring the possibility for development, acceleration of technological growth and support for the main SDGs.

References Berzon, N. I., Novikov, M. M., Pozharskaya, E. L., & Bakhturina, Y. I. (2022). Monitoring the modern experience of financial risk Management in Russia based on corporate social responsibility for

The Risks of Implementing and Managing the SDGs in the Company’s Activities: A. . . sustainable development. Risks, 10, 92. Accessed June 14, 2022, from https://www.mdpi.com/2227-9091/10/5/92#cite Bozo, N., Maslov, M., Tsoy, M., Shchekoldin, V., & Petrov, S. (2021). Problems and prospects of import substitution in Russia: Methodological approaches. In Web of conferences (Vol. 291, p. 02029). Accessed June 14, 2022, from https://www.e3s-conferences.org/ articles/e3sconf/pdf/2021/67/e3sconf_sdgg2021_02029.pdf Golikova, V., & Kuznetsov, В. (2017). Perception of risks associated with economic sanctions: The case of Russian manufacturing. PostSoviet Affairs, 33(1), 49–62. Gudkova, O. V. (2020). Impact of the pandemic on the logistics market in Russia. Scientific Journal “Economics. Sociology. Right”, 3(19), 9–13. Kuznetsov, S. V. (2019). Factors and tools for assessing the level of sustainable industrial development. Yekaterinburg, 216. Li, Z., & Li, T. (2022). Economic sanctions and regional differences: Evidence from sanctions on Russia. Sustainability, 14, 6112. Accessed June 14, 2022, from https://www.mdpi.com/2071-1050/ 14/10/6112/pdf?version=1652844703

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Makarova, I., Gubacheva, L., Makarov, D., & Buyvol, Р. (2021). Economic and environmental aspects of the development possibilities for the northern sea route. Transportation Research Procedia, 57, 347–355. Maksimova-Kulieva, E. A., & Lepetiukh, A. Y. (2018). Problems and trends of logistics development in Russia. Vector economy, 6. Accessed June 14, 2022, from http://vectoreconomy.ru/images/ publications/2018/6/logistics/Maksimova-Kulieva_Lepetiukh.pdf Mochalova, L., Sokolova, O., & Yurak, V. (2019). Logistics system of waste management at the mining enterprises. Journal of Environmental Management and Tourism, 10(1), 202–209. RBC.RU. (2019). RBC ranking: 500 of the largest companies of Russia. Accessed June 14, 2022, from https://www.rbc.ru/economics/26/09/ 2019/5d8b6cf89a7947e5b825dac5 Verstina, N., Tereshkina, T., & Treyman, M. (2018). Development of the principles of “green” logistics in the cities of The Russian Federation. MATEC Web of Conferences, 251, 05027. Accessed June 14, 2022, from https://www.matec-conferences.org/articles/ matecconf/pdf/2018/110/matecconf_ipicse2018_05027.pdf

The Importance of the International Policy of Globalisation and Open Economy to the Reduction of the Global Risks for Sustainable Development Anastasia A. Sozinova , Nadezhda K. Savelyeva and Natalia M. Fomenko

, Elena V. Patsyuk

Abstract

JEL Codes

In this work, we identify the influence of the international policy of globalisation and open economy on the decrease in the consequences of the impact of global risks on the achievement of the Sustainable Development Goals of countries. We use the following methods: complex approach, comparative analysis and method of classification. The formulated classification of the specific features (directions) of the influence of globalisation and open economy on the reduction of the consequences of risks of the studied category is prepared for developed and developing countries, which are oriented toward the participation in the global integration processes. The revealed directions of the positive influence of these processes can change their character depending on the international economic, environmental and social policy of the global market’s participants. We prove the advantages of countries’ orientation toward the adoption of the foundations of the policy of international integration in the context of the main spheres of state development. The scientific novelty of this research is due to the theoretical development of the issues of classification and characteristics of the specifics of the given processes’ influence on the reduction of the risks’ effects.

F41 · F43 · F61 · F63 · F64 · F66 · Q56

Keywords

International integration · Globalisation · Open economy · Anti-isolationist influence · Anti-crisis influence · Quality of products A. A. Sozinova (✉) · N. K. Savelyeva Vyatka State University, Kirov, Russia e-mail: [email protected]; [email protected] E. V. Patsyuk Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia N. M. Fomenko Plekhanov Russian University of Economics, Moscow, Russia

1

,

Introduction

Development of the modern knowledge economy is intensive, similarly to the processes of transformation of globalisation. Modernisation of the economy, which consists mainly of the development of new technologies, increase in highly-skilled personnel and development of the modern branches of production, is very important for the long-term process of globalisation. At the same time, technical progress is accelerated under the influence of the constant need for innovations. Companies in different spheres use new forms of production, management, organisation of cooperation and distribution. These integration processes are performed also at the international markets, and some entrepreneurial structures function in global markets. These phenomena are peculiar for countries with an open economic system, which is integrated into the world economic system, at the level of export (import) of goods (services) and technologies and the level of movement of capital and staff. Globalisation and openness of the economy are factors that influence the removal of barriers to the development of the international economy, growth of world GDP and provision of competitive conditions of development in national markets. Thus, it is necessary to note their large influence on the reduction of the level of risks to the sustainable development of countries at the global level, which requires serious research. The goal of this work is to identify and analyse the influence of the international policy of globalisation and open economy on the reduction of the consequences of the impact of global risks on the achievement of the Sustainable Development Goals of countries. For this, the following tasks are solved: identifying the approaches to determination of the influence of the two mentioned processes on the reduction of the negative effect of global risks for sustainable

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_59

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development; systematising the specific features of the influence of globalisation and open economy on these risks.

2

Materials and Method

The theoretical, methodological and empirical aspects of assessing the impact of globalisation and open economy on the minimisation of the impact of the risks of global character on the state of sustainable development are formulated in Bashan and Kordova (2021), Chang et al. (2022), GarcíaÁlvarez and Moreno (2018), Gulia (2021), Jiang et al. (2022), Liu (2020), Pyakurel (2022), and Wangwe et al. (2021). These materials have a local, mainly fragmentary character, and thus there is a necessity to continue scientific research in this direction. In this work, we use the complex approach to assess the scientific approaches and distinguish the features of the influence of the given phenomena on the reduction of risks. Comparative analysis is used to compare the authors’ positions in the context of determining the character of these processes’ influence on the risks of the studied category. The method of classification is used to reveal the list of features of the influence of the assessed processes on the change in the given risks. The analysis is performed based on the theoretical and empirical data on the influence of globalisation and an open economy on the transformations of global risks at the level of countries. The logic of the research implies the formulation of the main scientific approaches in this sphere and classification of the specifics of the impact of the given processes on the reduction of global risks for sustainable development of countries.

3

Results

Analysis of the main scientific approaches to determining the specifics of the influence of the international policy of globalisation and open economy on the reduction of the global risks for sustainable development will allow evaluating the boundaries and diversity of the existing positions in this direction and performing a critical assessment of the most optimal characteristics of the influence. The first scientific approach is oriented toward the evaluation of the influence of the two phenomena on risks as the factors for reducing the social (socio-cultural), economic and environmental isolation of countries (anti-isolationist influence). The coverage of such influence is connected with the dissemination of the globalisation tendencies (which are

oriented toward the integration of entrepreneurship, implementation of the lead technologies that are required for competition in the world markets and adoption of the world standards in all spheres of life activities) and the development of open economy, which implies the state’s implementing the corresponding policy of the free movement of capital, personnel, technologies and products (services). Within this approach, it is necessary to note the provisions of the Gulia (2021), which contains the classification and characteristics of the specifics (directions) of the influence of globalisation and openness of the economy on the reduction of risks for sustainable development of countries at the global level. According to the author, these processes allow reducing the negative results of internal national isolation within the main spheres of sustainable development. The authors state that within this anti-isolationist policy, the following is ensured at the level of unification of the efforts of public and private sectors: 1. Reduction of the negative statistics on the development of the economy and social sphere. 2. Reduction of the technological and innovative underrun in all spheres of life activities and economic sectors. It is implied that implementation of the processes of globalisation and open economy, as a strategic foundation of the state strategy of development, will allow raising the level of the digital economy and digitalisation in the critical infrastructure, which is necessary to solve social (implementation of innovative technologies in various spheres of interaction with population) and environmental tasks (forecasting of natural disasters, robotisation in the sphere of monitoring of environmental pollution). 3. Influence on the prevention of social, environmental and economic catastrophes. This direction is connected to the treatment of the role of these processes as regulators of protection of sustainable development from catastrophic situations. Within the orientation at global approaches and under the conditions of openness, national economies do not allow the problems of this type to influence the cardinal change in the development, which is connected with the continuous interaction with other communities and supra-national unions, which experience is a model of effective development. Assigning this category of positive effects of influence to anti-isolationist is debatable. Provision of protection from the negative impact of crisis phenomena can be considered within the second scientific approach, which implies anti-crisis influence. In the context of the second scientific approach, it is worth considering the positions given in Liu (2020), regarding the effect of the orientation of the state policy of open economy

The Importance of the International Policy of Globalisation and Open Economy to the. . .

and international globalisation toward the reduction of sustainable development risks. According to the author, these processes, implemented in the context of structural transformations of the economy for over forty years, allows ensuring the effective approach of the following: – Domestic national traditions of orientation to agrarian production, which implies the issue of products with low value added, low level of wages and social standards to the industrialised economy, which implies the issue of products with higher value added and higher social standards. The economy of rural territories was gradually transformed into an industrial agrarian economy. Although China is peculiar for certain inequality in the industrial development of territories, certain regions have vivid characteristics of the priority of agrarian production; – From economy’s industrialisation to a high level of urbanisation, quick development of territories and growth of living standards in regions (increase in social standards; – From standards of the planned economy to market conditions, which raises China’s position in the world economy. The third scientific approach envisages the evaluation of the influence of the considered processes on the reduction of risks within the principle of intensive expansion of globalisation and open economy as an indicator of improving the goals in the sphere of sustainable development (intensive influence on the reduction of the negative influence of global risks). In the context of this approach, it is worth noting the provisions of Pyakurel (2022), which contain the substantiation of the intensive influence of the processes of implementing the policy of open economy and globalisation on the main risks to the components of national sustainable development. According to the authors, the characteristics of such influence given the main components of the given phenomenon are as follows: 1. Influence on the environmental component: – Reduction of the material track. The authors state that, according to the recent data from thirteen countries in the sphere of globalisation, only Denmark and Sweden have not ensured a significant reduction in energy consumption after their citizens’ incomes exceeded world average incomes; – Reduction of CO2 emissions and environmental pollution in countries that achieved a high level of citizens’ incomes. According to Pyakurel (2022), there is a positive influence on countries that achieved a high level of globalisation and openness of the economy,

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with a simultaneous increase in population’s incomes. However, there is an example of China, in which, despite a high level of globalisation and openness of the economy, the increased level of the population’s incomes did not lead to the reduction of environmental risks (Jiang et al., 2022). Based on the materials of Chang et al. (2022), we can conclude that an insufficient balance of the components of sustainable development, connected with insufficient ecologisation, is caused by the command and administrative policy of the state. This model is not oriented toward the citizens’ independent adoption of the concept of sustainable development—it is aimed at the creation of acceptable indicators of development, which can be demonstrated to the world community as a result of ecologisation. 2. Influence on the economic component. The main directions of such positive intensive influence are implementation of the paradigm of green growth, which is connected to the opportunity for economic growth without an increase of the burden on the environment (use of eco-friendly technologies and materials and reduction and minimisation of production waste and life activities’ waste) (García-Álvarez & Moreno, 2018); use of alternative economic models. There are certain approaches that reject the theory of the influence of the green growth theory on supporting the level of environmental risks. Within these approaches, the authors prove the impossibility of such influence, stating that even if production growth had been achieved without any damage to ecology, that would have led to an increase in consumption, which leads to the growth of pollution and waste in the environment. On the basis of these alternative approaches, it should be concluded that the balance of the components of sustainable development is possible in the case of support for the economy at a certain level, with the focus on restraining quick growth. One can disagree with such a statement since the existence of inequality among countries, especially in the technological and social spheres will not allow raising the level of cleanliness of the environment. If the population and economic subjects independently adopt the paradigm of the green economy, the state policy should be also effective in this sphere. 3. Influence on the social component. According to Pyakurel (2022), the growth of the social component of sustainable development of countries that demonstrate high globalisation and openness of the economy implies the improvement in quality and lifespan; an increase in human development. Though the author points to the direct dependence between the reduction of risks of the social component of sustainable development and globalisation

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and growth of the economy’s openness, these results are not easy to implement for many developing countries in the context of refusal from the traditional isolationist tendencies in many sectors. The fourth scientific approach envisages determining the specifics of these processes’ influence on the minimisation of the given risks in the context of a focus on the quality of exported products and their diversity, which conforms to market needs as the basis of the economic component’s effectiveness (influence of the market advantages of quality and diversity of products). The provisions of Bashan and Kordova (2021), Huchet et al. (2018), Kyove et al. (2021), and Wangwe et al. (2021) on the influence of these processes on the reduction of risks conform to the essence of this approach. The authors show, by the example of empirical studies, that success of globalisation and focus on the openness of the economy (including the openness of trade) depends on supporting the quality of products, which is exported, provided through the effectiveness of technologies of production, management and logistics; the existence of a large assortment of products that are exported to foreign markets and its ability for quick transformations within the main groups depending on the change in market priorities and economic transformations. The authors of Huchet et al. (2018) prove that countries with high values of these parameters ensure high results of the openness of economy and globalisation, which allows them to implement the goals of the economic component of sustainable development; at the same time, countries with insufficient quality of products and poor assortment cannot, despite the economy’s openness, obtain substantial effects from the international integration.

4

Discussion

Based on the complex analysis of the scientific approaches, let us formulate a classification of the specific features of the influence of the considered processes on the reduction of risks in the sphere of sustainable development. These types of influence are as follows: – Anti-isolationist influence, which is peculiar for the modern stage of formation of the international integration processes of countries that are oriented toward the internal traditions of the economy and partnership relations. The achievement of an effective decrease in risks in this sphere is predetermined by the country’s readiness for cardinal reforms within the main spheres of economy and on the provision of the legal framework for implementing the

basics of an open economy, in the direction of the announced course toward the global integration; – Anti-crisis influence, which envisages countries’ joining the global economic system, for external support for protection from challenges and threats in the spheres of economy and ecology and social sector; – Intense influence on the reduction of the negative impact of global risks, which is connected with the dependence of quick growth of the economy and social standards on the achievement of the balance of the sustainable development components; – Influence of market advantages of quality and diversity of products, based on the concept of the dependence of economic growth on the parameters of the quality of exported products and assortment under the conditions of international integration.

5

Conclusion

In this work, we managed to reveal a mutual dependence between the processes of international globalisation of all spheres of life activities and the openness of national economies. We also determined their positive influence on the reduction of risks of implementing the main components of sustainable development. The described specific features of this impact, identified based on the study of theoretical and applied materials, demonstrated the existence of the advantages of achieving the balance of sustainable development in countries that traditionally have high indicators of globalisation and economic development. However, we also revealed the difficulties in achieving high parameters in this sphere with developing countries, especially those that have not overcome the isolation of economic development and are oriented toward closed development. Further research in this direction should focus on the problems of reduction of global risks for sustainable development.

References Bashan, A., & Kordova, S. (2021). Globalization, quality and systems thinking: Integrating global quality management and a systems view. Heliyon, 7(2), 06161. Accessed June 16, 2022, from https://www. sciencedirect.com/science/article/pii/S2405844021002668 Chang, W.-Y., Wang, S., Song, X., & Zhong, F. (2022). Economic effects of command-and-control abatement policies under China’s 2030 carbon emission goal. Journal of Environmental Management, 312, 114925. Accessed June 16, 2022, from https://www. sciencedirect.com/science/article/pii/S0301479722004984 García-Álvarez, M. T., & Moreno, B. (2018). Environmental performance assessment in the EU: A challenge for the sustainability. Journal of Cleaner Production, 205, 266–280.

The Importance of the International Policy of Globalisation and Open Economy to the. . . Gulia, S. (2021). Implications and impacts of globalization on sustainable development. An International Bilingual Peer Reviewed Refereed Research Journal, 7(27), 112–119. Huchet, М., Mouël, C. L., & Vijil, М. (2018). The relationship between trade openness and economic growth: Some new insights on the openness measurement issue. The World Economy, 41(1), 59–76. Jiang, Y., Tian, S., Xu, Z., Gao, L., Xiao, L., Chen, S., Xu, K., Chang, J., Luo, Z., & Shi, Z. (2022). Decoupling environmental impact from economic growth to achieve sustainable development goals in China. Journal of Environmental Management, 312, 114978. Accessed June 16, 2022, from https://www.sciencedirect.com/ science/article/pii/S0301479722005515 Kyove, J., Streltsova, K., Odibo, U., & Cirella, G. T. (2021). Globalization impact on multinational enterprises. World, 2, 216–230.

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Liu, X. (2020). Structural changes and economic growth in China over the past 40 years of reform and opening-up. China Political Economy, 3(1), 19–38. Pyakurel, Р. (2022). Rethinking an approach for sustainable globalization. Globalization and sustainability - recent advances, new perspectives and emerging issues. Accessed June 16, 2022, from https://www.intechopen.com/online-first/81920 Wangwe, S., Simonetti, R., Tibandebage, P., Mackintosh, M., Israel, C., & Mujinja, P. G. M. (2021). Upgrading under globalization in health-related industries in Tanzania: The case for dynamic industrial deepening. Innovation and Development. Accessed June 16, 2022, from https://www.tandfonline.com/doi/full/10.1080/ 2157930X.2021.1886415

The Role of the State Management Institutions in the Reduction of the Macro-Economic Risks for Sustainable Development Ainura A. Adieva , Andrey V. Kuklin , Irina V. Milchik , and Elena V. Kizil

Abstract

Keywords

The goal of this paper is to systematise the main directions of the influence of institutions of state management on macro-economic risks for sustainable development. The research is based on the use of complex analysis, comparative method and structural approach. We analyse the existing approaches to the categorisation of the types of effects of the system of public authorities of different levels on the reduction of risks in the sphere of sustainable development. We prove that though the established directions of the influence are peculiar for countries that have high indicators of effectiveness in the context of state management, their main aspects are adapted under the conditions of functioning of all countries that focus on implementing the sustainable development concept. The presented characteristics and types of influence can change depending on transformations of the programme foundations of this concept, given the development of innovative approaches in the sphere of the studied risks management. The novel aspect of the research is due to the development of a theoretical framework of classification of the categories of influence of public authorities’ institutions on the reduction of consequences from sustainable development risks.

Macro-economic risks · Sustainable development · Institutions of state management · Centralised influence · Decentralised influence

A. A. Adieva (✉) International University of Kyrgyzstan, Bishkek, Kyrgyzstan A. V. Kuklin · I. V. Milchik Vyatka State Agrotechnological University, Kirov, Russia Vyatka State University, Kirov, Russia e-mail: [email protected]; [email protected] E. V. Kizil Komsomolsk-na-Amure State University, Komsomolsk-on-Amur, Russia

JEL Codes

О11 · О44 · Q01 · Q56 · Q57 · Q58

1

Introduction

Critical periods of society’s development are always accompanied by changes in socio-economic and demographic processes, which causes the necessity to reconsider the traditional views of the organisation of the environment and development of new principles and methods of managing the formation of a new paradigm of society’s development of society. There have been many critical periods of transformation of all spheres of life activities in the history of humanity, which led to an acceleration of the search for optimal solutions and strategies, as well as the process of society’s development. The modern state of development of countries and the global community could be called critical, due to the large difference between the economic, environmental and social components. The global community paid attention to the crisis state of the planet in the late 1960s. Before this, sustainable development was associated only with the economic rise. The orientation toward the balance between economy, ecologisation and environmentalism formed at the global level within the concept of sustainable development during a significant aggravation of these components of society’s life, in the period of realisation of the necessity to set priorities in the spheres that are related not only to the growth of capitals. At the modern stage, many countries that adopted and supported the UN Sustainable Development

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_60

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Goals, continue dealing with problems (risks) that hinder the stability and balance of the three foundations of this process. The state is responsible for the adoption and declaration of the strategic goals of sustainable development and development of the directions of the fight against macro-economic risks in this sphere; the state implements this through the corresponding system of the institutions of state management. The study of the influence of these subjects on the reduction of the given risks on the formation of the components of national sustainable development requires a complex approach and determining the corresponding key directions. This paper is aimed at the systematisation of the main directions of the influence of institutions of state management on macro-economic risks for sustainable development. The tasks sought in this paper are as follows: determining the key scientific approaches regarding the influence of state management institutions on macro-economic risks of sustainable development; systematising the directions of the influence of the assessed institutions on the reduction of the influence of these risks.

2

Materials and Methods

Sustainable development risks, the role of state and its institutions in preventing or reducing the influence of the risks are studied in Alshehhi et al. (2021), Annukka et al. (2019), Boess et al. (2021), Bornemann and Christen ( 2019), Christofzik et al. (2022), Geyler et al. (2018), Krantz and Gustafsson (2021), Kuhlmann et al. (2021), Lüth and Schaffer (2022), Meschede (2019), Räkköläinen and Saxén (2022), and Salo et al. (2022). The scientific works elaborate on isolated macroeconomic risks in this direction and the risks that are peculiar for national economies, with their specifics. According to these problematic aspects, the activities of state institutions in reducing the risks’ influence are analysed. In this research, we consider the issues of establishment of the structure of state institutions and their common functions based on the method of complex analysis. The comparative method is used to identify countries that demonstrate high effectiveness in the activities of these institutions. The structural method is used to assess the effect of the system of bodies of state management of the studied countries on the reduction of the macro-economic risks for sustainable development. We analyse the experience of the lead countries in the sphere of effective state management and build their list based on the analysis of the materials of their ranking, presented in the context of evaluation of global competitiveness (IMD, 2022). We analyse countries that are leaders in the sphere of effective state management: Switzerland, Germany and Finland.

The main materials that are analysed here are scientific works and analytical data on the issues of participation of state management institutions in preventing and reducing the negative influence of macro-economic risks for sustainable development.

3

Results

There exists a scientific approach that identifies the characteristics of the influence on the main spheres of national sustainable development (social, economic and environmental) in the context of the orientation toward a decentralised development of the key parameters of minimisation of macro-economic risks for sustainable development within territories (decentralised approach). In the context of this approach, it is supposed that the programme framework of sustainable development within the main components and the indicators of reduction of risks in this direction are developed by territorial bodies of public authorities. Programmes are adopted at the level of central authorities, and then they are discussed, corrected and adapted according to the programme framework of the country’s sustainable development. Mechanisms and tools for implementing these programmes, with their potential diversity, are equal, similar to the parameters of the sustainable development components (social standards, environmental norms, currency exchange rates, credit interest rate, etc.). Within the provisions of this approach, we shall consider the directions of influence of state management institutions of Switzerland on the minimisation of macro-economic risks for sustainable development, which are presented in Bornemann and Christen (2019). The authors do not distinguish the directions of influence of this category, but analysis of the materials of the empirical research on the role of public authorities bodies of different levels in the achievement of the Sustainable Development Goals allows identifying the following types of influence: 1. Territorial: risks for the achievement of the main indicators of the SDGs (innovative development of infrastructure, expenditures for the social sector, expenditures for ecologisation) at the level of cantons (administrative territories) and ways to reduce them through the use of tax preferences, subsidies (for economy); social standards for population, given the specifics of the territories; expenditures for ecologisation; 2. Federal: formation of state measures on the regulation of risks in the social (social standards at the federal level), economic (measures of regulation of price and exchange rate risks, risks of inflation (Alshehhi et al., 2021), environmental sphere (adoption and reformation of the environmental laws (mainly on CO2 emissions)), given the

The Role of the State Management Institutions in the Reduction of the Macro-Economic. . .

declared influence on their regulation in cantons. The impact on certain risks for sustainable development is connected with large problems. Namely, the adoption of environmental laws was accompanied by discussions and a national referendum in the last decade (Lüth & Schaffer, 2022). During a 2021 referendum, there were raised issues on the ban on subsidies for farms that use certain types of pesticides and on imposition of a tax for air flights for passengers (EUR 110); these initiatives were not supported, and, accordingly, no initiatives were implemented in the sphere of ecologisation at the federal level from the Ministry of the Environment, Transport, Energetics and Communication. There is an approach based on the equal adoption of the concept of sustainable development and reduction of risks within state management at the central and territorial levels. This approach implies that countries have a decentralised system of management and take into account territorial and national interests. In the context of this approach, it is worth mentioning the positions given in Kuhlmann et al. (2021), which envisage the directions of the influence of institutions of state management of different levels on the risks of sustainable development (Fig. 1): strategic determination of the minimisation of risks at the level of central federal authorities, connected with the designation of the main elements and tasks; identification of the risks and ways to reduce them within local authorities; formation, implementation and control over the realisation of state measures in the sphere of operative regulation of these risks with a focus on the programme aspects and planned measures. The scheme of the management of the macro-economic risks of sustainable development at the level of public authorities of Germany is presented in Fig. 1. The study of the scientific and analytical data allows stating that an important feature of the German management of sustainable development is the orientation toward resolution of problems and minimisation of risks at present, without creating additional difficulties for future generations. Another approach is based on the centralised effect on the implementation of goals and minimisation of sustainable development risks, performed at the level of central authorities in the context of achievement of small tasks (programmes and projects). The use of this approach implies the management based on the “small wins” concept and the orientation toward the implementation of the large-scale goals in the long term. In the context of this approach, it is possible to consider the list of characteristics of the influence of public authorities on the reduction of risks based on the experience of Finland (Annukka et al., 2019; Räkköläinen & Saxén, 2022; Salo

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et al., 2022). Based on the analysis of these scientific materials, we revealed that the key directions for the given effect are as follows: – Strategic management of sustainable development within the main spheres, which list has been formulated within the approach of the UN members (achievement of stable employment, provision of the prospects for well-being, sustainable development of society, population’s equal access to participation in public development and rational attitude toward nature and resources), and identification of risks of the macro-economic character in this direction (programme strategic provision of protection from risks); – Management of identification of risks in all spheres of sustainable development, based on the gathering of data on local needs, development of the ways to implement them and realisation of projects and programmes in this direction. General regulation of this direction is performed by the prime minister, who is the head of the Finnish National Committee on Sustainable Development; ministers, who are members of the coordination network and have responsibilities for the adoption of directions (problems) that require interference, adoption of projects (programmes) on the given tasks and their management at the highest level; coordination groups, councils, unions and research organisations, which gather operative information on possible risks (problems), develop programmes and projects and implement them after they are approved by ministers. The approach used by the Finnish government is a centralised network local approach in the management of the minimisation of the macro-economic risks for sustainable development. The analysis of the scientific materials (Boess et al., 2021; Krantz & Gustafsson, 2021) shows that Denmark and Sweden use an approach to the management of minimisation of macro-economic risks that is similar to the Finnish one. Denmark’s specific feature is the existence of sectoral local management of this category of risks.

4

Discussion

Analysis of the above scientific approaches allows identifying the key categories of the influence of state institutions on the minimisation of macro-economic risks for sustainable development, which include: 1. Decentralised influence, which is connected with the focus on priorities of territories in the development of the main parameters and measures of reducing the given risks. The

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A. A. Adieva et al. 1st stage At the level of central federal authorities: Management of the implementation of the main elements of the sustainable development strategy, including the minimisation of risks (quality of life, equality of generations, international responsibility and social unity). Tasks of the strategy: fiscal stability, climate and energetics, stable economic activities that are based on ecologisation and social responsibility, the sustainable policy of management and use of water resources ↓ 2nd stage At the level of states’ authorities: Identification of risks in the achievement of the main indicators of the Sustainable Development Goals (development of infrastructure, expenditures for social sector, expenditures for environmental events); formation of the directions for their minimisation. Directions for reducing the risks: tax preferences, subsidies (for business); social standards for the population, which take into account the territories’ specifics; expenditures for ecologisation. ↓ At the level of the central federal authorities: Development, implementation and control over state measures on the operative regulation of sustainable development risks given the programmes presented by states. Main directions for influence: the creation of a favourable climate for the economy's development, including in the fiscal sphere (the last tax reform took place in 2021, it was aimed at the growth of GDP through the reduction of tax burden); adoption of federal social standards for the population; expenditures for environmental measures.

Fig. 1 The scheme of managing the macro-economic risks for sustainable development at the level of German public authorities. Source: Compiled by the authors based on Christofzik et al. (2022), Geyler et al. (2018), Kuhlmann et al. (2021), and Meschede (2019)

use of such type of influence is peculiar for countries with a high level of decentralisation of state management (Switzerland); 2. Equal influence on the minimisation of risks within public authorities of the central and territorial levels (experience of Germany); 3. Centralised local influence on the prevention, reduction and reduction of the level of risks of this type (within this type of influence, there are network forms of state management in this sphere and sectoral local directions) (Finland, Sweden and Denmark). The presented types of influence are peculiar for countries with a high level of effectiveness of state management. It could be noted that the orientation toward such types (models) of influence are adapted, in a certain form, in developing and developed countries. The success of implementing these models in Switzerland, Germany, Finland, Denmark and Sweden is due to the long practice of management of sustainable development goals and risks.

5

Conclusion

It is possible to state that state management institutions have a decisive role in the minimisation of the consequences of the impact of the studied risks. In some countries, the institutional structure of influence has a clear centralised character, which, in its turn, predetermines the unity of goals and tasks within the achievement of the sustainable development indicators and the prevention of emergence or increase in the effect of risks. In the case of centralised influence, the activities of public authorities, though implying the interaction with territorial administration, are based on the national

interests of the country (adoption of the common environmental law, tax reform, social benefits). In the case of decentralised influence, the interests and specifics of the sustainable development of territories are taken into account; the functioning of central public authorities is built based on close and equal cooperation with local authorities. In the context of the orientation of state management institutions on the centralised local network approach within the network interaction with all levels of authorities, institutional structures implement certain tasks and programmes in the sphere of sustainable development, including the projects of protection from risks.

References Alshehhi, N., Nobanee, H., & Hmimi, N. (2021). An overview of the Swiss National Bank. Accessed June 18, 2022, from https://www. researchgate.net/publication/342703574_An_overview_of_the_ Swiss_National_Bank Annukka, B., Lähteenoja, S., Ylönen, M., Korhonen, K., Linko, T., Kirsi-Marja, L., Lyytimäki, J., Salmivaara, A., Salo, H., Schönach, P., & Suutarinen, I. (2019). An evaluation of Finland’s sustainable development policy (p. 1). Publications of the Government s analysis, assessment and research activities. Accessed June 18, 2022, from https://www.researchgate.net/publication/336346192_PATH2030__An_Evaluation_of_Finland's_Sustainable_Development_Policy Boess, E. R., Lyhne, I., Gallego Davila, J., Jantzen, E., Kjellerup, U., & Kørnøv, L. (2021). Using sustainable development goals to develop EIA scoping practices: The case of Denmark. Impact Assessment and Project Appraisal, 39(6), 463–477. Bornemann, B., & Christen, M. (2019). Sustainability governance in public administration: Interpreting practical governance arrangements in Swiss cantons. Environmental Policy and Governance, 29, 159–169. Christofzik, D. I., Fuest, A., & Jessen, R. (2022). Macroeconomic effects of the anticipation and implementation of tax changes in Germany: Evidence from a narrative account. Economica, 89, 62–81.

The Role of the State Management Institutions in the Reduction of the Macro-Economic. . . Geyler, S., Kerber, Н., Lux, А., Hedrich, М., Beck, J., Möller, К., Selvakumar, G., Eller, М., Tocha, С., & Sonnenburg, А. (2018). Ensuring sustainable development for the German water sector: Setting the stage for the risk-based sustainability management system (RSS). Urban Water Journal, 15(6), 518–525. IMD. (2022). World competitiveness ranking 2022 results. Accessed June 18, 2022, from https://www.imd.org/centers/world-competitive ness-center/rankings/world-competitiveness/ Krantz, V., & Gustafsson, S. (2021). Localizing the sustainable development goals through an integrated approach in municipalities: Early experiences from a Swedish forerunner. Journal of Environmental Planning and Management, 64(14), 2641–2660. Kuhlmann, S., Proeller, I., Schimanke, D., & Ziekow, J. (2021). Public administration in Germany (p. 415). University of Birmingham.

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Lüth, M., & Schaffer, L. M. (2022). The electoral importance and evolution of climate related energy policy: Evidence from Switzerland. Swiss Political Science Review, 00, 1–21. Meschede, C. (2019). Information dissemination related to the sustainable development goals on German local governmental websites. Aslib Journal of Information Management, 71(3), 440–455. Räkköläinen, M., & Saxén, A. (2022). Pathway to the transformative policy of agenda 2030: Evaluation of Finland’s sustainable development policy. In Transformational change for people and the planet. Sustainable development goals series (pp. 237–249). Springer. Salo, H. H., Berg, A., Korhonen-Kurki, K., & Lähteenoja, S. (2022). Small wins enhancing sustainability transformations: Sustainable development policy in Finland. Environmental Science & Policy, 128, 242–255.

Innovations as the Basis for Managing the Region’s Sustainable Development Risks Almash A. Kutmanbekova and Elena S. Akopova

Abstract

Purpose: The purpose of this research is to identify the possibilities to use innovations as the main tools for managing the region’s sustainable development risks. To achieve this goal, we reveal the specifics of sustainable development at a regional level and study innovative technologies in the context of their possible use to solve the considered tasks. Design/methodology/approach: This research is based on an interdisciplinary approach, which includes the theoretical and practical developments of spatial economics, the economics of regional development, risk management, municipal and regional governance, the concept of sustainable development and a range of sciences on innovations. This research proposes a generalised systemic view of the specific features of sustainable development of a region and understanding of risks that emerge during this, as well as an important role of innovations in the context of management of these risks and achievement of goals by the subjects of management. Findings: We identify the essence of the concept of sustainable development and the main global solutions that characterise its modern understanding; we also focus on the multi-aspect character of sustainable development and the main role of the regional level in this hierarchy. We characterise the key features of the regional level of sustainable development and the basic risks connected with them. We also dwell on the specifics of understanding risk not only as an A. A. Kutmanbekova (✉) Osh Technological University named after M.M. Adyshev, Osh, Kyrgyzstan

, Alexey V. Tolmachev

, Nataliay V. Ketko

,

undesirable event but as the possibility to obtain profit under the conditions of the corresponding actions. Based on this, we determine an important condition for managing the risks to the region’s sustainable development—the use of the risk as the possibility for qualitative and quantitative changes. We substantiate the important role of innovations in the context of managing the region’s sustainable development risks, characterise a range of innovative solutions that can solve the tasks of the studied processes and reveal the influence of blockchain and innovations on different types of risks. We reveal the large potential of the studied innovations in the context of managing the region’s sustainable development risks, which is based on connecting the analogue processes to digital devices and systems of information processing, ability to accumulate and process large arrays of information, performing the monitoring of situation and modelling of decision options and their consequences, etc. We discover the important role of innovations in the modern processes of risk management of sustainable development at all levels, including regional. Originality/value: We find the connection between innovative technologies and general types of regional risks to sustainable development and characterise their potential in the management of the considered risks. Keywords

Innovations · Risk · Risk management · Sustainable development · Regional development · Regional economy · Industry 4.0

A. V. Tolmachev Kuban State Agrarian University named after I.T. Trubilin, Krasnodar, Russian Federation N. V. Ketko Volgograd State Technical University, Volgograd, Russia

JEL Codes

D81 · O10 · O13 · O15 · O18 · O19 · O31 · O33 · O40

E. S. Akopova Rostov State University of Economics, Rostov-on-Don, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_61

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Introduction

The start of the industrial revolution saw the beginning of the processes of the quick growth of the population and development of production. The intensive exploitation of natural resources led to an increase in the volumes of waste and pollution, growth of burden on the environment and complications of the processes of life systems’ preservation (Kates & Parris, 2003). In course of time, the negative influence of humans on the environment grew, and the problems increases. Threatening rates of changes, achieved by humanity in the middle of the twentieth century, predetermined the necessity to reconsider the attitude toward the environment and society and to make a common decision on the achievement of balance in the sphere of using natural resources and economic and social development. Such a decision in the 1970s was the formation and general recognition of the sustainable development concept. The evolution of the concept from the unclear global goal of sustainable use of natural resources to the Millennium Goals and then to the Sustainable Development Goals supplemented and institutionalised the global vision of the principles of co-existence of humanity and nature (Shi et al., 2019). At present, implementation of the sustainable development concept is a strong tie between all sectors of the economy, spatial formations and life systems. Its main goals include the achievement of the balance of the economic, social and environmental interests of business, government and society. The complication of the approaches to managing the sustainable development of different level systems creates additional difficulties and risks, and the role of the key tool for achieving the Sustainable Development Goals is more often performed by innovations.

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Materials and Methods

The concept of sustainable development is implemented under the conditions of a comprehensive methodology. It is based on values and objectives that are determined and institutionalised at all levels, from global and local. A large number of levels is set on the interdisciplinary character of the considered problem and implemented through the methodological tools of spatial and regional economics, theory and practice of risk management, municipal and regional governance, the concept of sustainable development and a range of sciences on innovations and their role in the development of management systems. According to the complexity of the studied problem, the publications that we studied and that contributed to the methodological framework of this research, include different profiles and directions, including the studies of the evolution

of the sustainable development concept (Shi et al., 2019); resolution of the problem of interaction of stakeholders in the context of achievement of the SDGs and their measuring (Boiral et al., 2020); understanding of risks and related processes under the conditions of sustainable development (Brown et al., 2009; Dobler et al., 2014; Kumarasiri & Gunasekarage, 2017; WBCSD, 2017); consideration of the necessity to use different approaches during the evaluation of the level of development of the national and regional economy (Jackson et al., 2019); arguments in favour of the existence of complex risks to sustainable development in different spheres (Anukwonke et al., 2022; Tambovceva & Tereshina, 2021); substantiation of the decisive role of innovations in the process of achievement of the SDGs (Bonilla et al., 2018; Dossou, 2018; Mabkhot et al., 2021; Shoker, 2021). The main objective of this study is the search for the theoretical and practical directions of using innovations as the key factor in managing the risks to sustainable development at a regional level.

3

Results

In the modern world, one of the mandatory criteria of development is sustainability. Limited resources, quick growth of the planet’s population, aggravation of the state of the environment and increase in social standards of life set new requirements for the concept of economic development. Based on this, development goals contain, together with the growth of economic indicators, the requirements for the reduction of anthropological and technological impact on the environment, resource and energy saving, achievement of the corresponding indicators in the sphere of healthcare, education, etc. The modern understanding of sustainable development is based on four basic decisions made at: – – – –

Rio Conference (1992); UN Millennium Summit (2000); Rio“+20” Conference (2012); The UN Development Summit (2015).

According to them, sustainable development envisages not only satisfaction of the current needs of humanity without damage to the future generations’ ability to satisfy their needs (Ammann, 2002) but also the criticism of the quantitative measuring of GDP, a different view of the qualitative changes in society and harmonisation of the economic, social and environmental goals. The sustainable development concept is a multi-level and inter-disciplinary category. Its key parameters are determined at the global level. Here, the key goals of the concept are

Innovations as the Basis for Managing the Region’s Sustainable Development Risks

formed—the Sustainable Development Goals and the basic mechanisms of their achievement. A more detailed implementation of the SDGs takes place at the national, regional or local levels. At that, the national level forms a comprehensive regulatory and programme-targeted system, and the regional and local levels specify them according to the features and needs of the region or city/town/village. In such a context, a region’s sustainable development can be considered from the position of state policy given regional differences and specifics. Such differences are most often based on geographical or cultural & historical specifics of the region, including unique climate conditions, unity of transport and logistical system, ethnic structure, cultural community, historical sphere, etc. From this position, the conditions for sustainable development of different regions could differ a lot and include the corresponding goals, aimed at satisfying the unique needs or solving the problems of regions, including the following: – Preservation of unique landscapes and natural diversity for poorly urbanised regions; – Resolution of the problems with irrigation for regions with insufficient or excessive precipitations; – Preservation of unique historical places and monuments to material and non-material culture for regions with ancient cultural traditions; – Attention to sustainable eco-systems in regions that are located within separate water systems, forest or mountainous regions, deserts, islands, etc. Sustainable development, in its nature, is one of the types of qualitative changes in the state of the entire system or its isolated elements, which leads to the improvement of its (their) parameters. Any change in the object of management in time is associated with uncertainty and risks. The more complex the processes of management, the more variants of the course of events there are and the larger uncertainty and level of risk they might have. According to the classical understanding of risks, management of risks is treated as the process of “identifying, assessing and preventing the negative events or situations that could substantially influence the organisation or society on the whole” (Brown et al., 2009). Despite this, there is a popular approach that treats risk not only as a danger that should be prevented but also as an opportunity. In such treatment, the risk becomes a certain change in the situation or deviation from the planned situation, which might provide an opportunity to obtain profit through the corresponding actions. Based on this, management of risks is not so much a process of avoiding risks by any means possible as a search for opportunities to use the situation for the general benefit. There are different approaches to the classification of risks to the sustainable development of regions. Most of them take

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into account the specifics of the concrete region. The most generalised classification is as follows: – Systemic risks—connected with the general characteristics of the management system or interactions within systems; – Information risks—connected with the lack or excess of information, inability to collect or process the required information; – Operational risks—connected to the specifics of execution of certain actions in the process of production, management, interaction, etc. They are related to technical problems, insufficient qualification, errors in planning and management, etc. Today, under the conditions of innovative development and dissemination of digital technologies, there are many opportunities for the effective management of risks to the sustainable development regions. Moreover, innovations acquire the role of the main tools for achieving the Sustainable Development Goals. Among the key innovations that possess the largest potential in the sphere of solving the tasks of sustainable development of regions and managing the corresponding risks, it is possible to distinguish blockchain, Big Data, additive manufacturing, augmented reality etc. Blockchain has extensive capabilities in the sphere of the development of digital business and the involvement of society in automatization. This technology raises the potential of automatisation of the processes of management of regional development, creates conditions for transparency and accountability, simplifies the processes of decentralisation and equality of access to values and technologies and allows observing confidentiality. The use of blockchain technologies allows reducing the information risks to the sustainable development of regions. Innovations that are part of Industry 4.0 technologies have larger capabilities. They perform a comprehensive impact on the development of any system, including the regional level, and their effect allows for more efficient achievement of the Sustainable Development Goals and management of the related risks. The comparison of the basic risks to the sustainable development of regions and the corresponding technologies is presented in Table 1. The above innovations create opportunities for the management of any risks to sustainable regional development. They allow connecting the information space to the analogue processes in the economy, ecology or social sphere and obtaining detailed information on their state. Besides, a range of innovations create additional opportunities for the development of production in regions, ensure digital security, allow calculating potential risks and managing them, using the situation to improve the level of the region’s development.

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Table 1 The influence of the innovations Industry 4.0 technologies on the basic risks to the sustainable development of regions Innovation Industrial Internet of Things (IoT) Big Data & analytics Cloud Computing (CC) Simulation Augmented reality (AR) Additive manufacturing (AM) Horizontal & Vertical System Integration (HVSI) Autonomous Robot (Ars) Cybersecurity

Basic risk All types of risks Mainly information and management risks All types of risks Mainly management and technological risks Mainly information and management risks Mainly operational risks Mainly management and operational risks Mainly operational and information risks Mainly security risks

Influence of the innovation on the risk Allows connecting devices and processes to the internet, which increases capabilities in studying risks and searching for solutions to their management Allows accumulating and processing unlimited volumes of information and raises the level of justification of managerial decisions Provide wide and convenient access to the pool of computational and programme resources, allows solving any problems once they emerge Creates conditions for creating a simplified model of the situation or problem and for the approbation of possible solutions based on their simulation Allows supplementing information of any type through additional visualisation and structuring Creates possibilities for the production of a large number of elements based on unified equipment Allows integration of all directions of regional development, including supply chains, which increases the transparency of internal processes and improves their management Can interact with any environment, which allows using the technologies for resolving complex environmental tasks Ensures security of all digital processes in the system of regional development management

Source: Developed by the authors

Thus, under the conditions of the management of regions’ sustainable development, innovations are a real basis for the monitoring of the state of the external and internal environment of the management object, planning of possible scenarios, accounting of potential risks and use of the current circumstances for the maximum benefit.

4

Conclusions

Given the complexity of the processes of managing the risks to the sustainable development of regions and the difference in the conditions and level of access to innovations, the study of potential capabilities of certain types of innovations in the context of their use to solve the problem of specific regions is of particular interest. Analysis of the quantitative or qualitative influence of each innovation on the specific risk of the specific region is especially important. Results obtained due to such research will allow contributing to the empirical conclusions on the decisive role of innovations in the provision of regions’ sustainable development. Sustainable development of a system of different levels is closely connected with the existence of certain risks, which emerge due to the uncertainty of the situation, based on a large number of courses of events. Many risks to the sustainable development of regions are connected with regional specifics and could be manifested in the environmental, economic or social spheres. According to the general classification of risks, there are information, systemic and operative risks. They also include the risks of management, technology, labour and other types. Under the modern conditions of the development of science and technology, there exist many innovations with a

large potential to solve the tasks of sustainable development, including managing the risks to the sustainable development of regions. In this context, it is important to take into account that risks are not just undesirable events but also opportunities to reach better results through the right actions in a no-typical situation. The use of the capabilities of modern innovative solutions, including the components of Industry 4.0 technologies, during the management of risks to the sustainable development of regions, allows for the comprehensive monitoring of the situation, modelling of its development, accumulation of the maximum data available and their processing to make an optimal decision.

References Ammann, M. (2002). Credit risk valuation: Methods, models and application. Springer Publishing House. Anukwonke, C. C., Tambe, E. B., Nwafor, D. C., & Malik, K. T. (2022). Climate change and interconnected risks to sustainable development. In S. A. Bandh (Ed.), Climate change. Springer. https://doi.org/10. 1007/978-3-030-86290-9_5 Boiral, O., Talbot, D., & Brotherton, M.-C. (2020). Measuring sustainability risks: A rational myth? Business Strategy and the Environment, 1–15, 2557–2571. https://doi.org/10.1002/bse.2520 Bonilla, S. H., Silva, H. R. O., Terra, M., Gonçalves, R. F., & Sacomano, J. B. (2018). Industry 4.0 and sustainability implications: A scenario-based analysis of the impacts and challenges. Sustainability, 2–24. Brown, I., Steen, A., & Foreman, J. (2009). Risk management in corporate governance: A review and proposal. Corporate Governance: An International Review, 17(5), 546–558. Dobler, M., Lajili, K., & Zéghal, D. (2014). Environmental performance, environmental risk and risk management. Business Strategy and the Environment, 23(1), 1–17. Dossou, P.-E. (2018). Impact of sustainability on the supply chain 4.0 performance. Procedia Manufacturing, 17, 452–459.

Innovations as the Basis for Managing the Region’s Sustainable Development Risks Jackson, R. W., Hewings, G., Rey, S., & Lozano Gracia, N. (2019). Regional development overview: Challenges, adopted strategies, and new initiatives. World Bank Policy Research Working Paper 9056. Accessed from https://ssrn.com/abstract=3485941 Kates, R. W., & Parris, T. M. (2003). Long-term trends and a sustainability transition. Proceedings of the National Academy of Sciences of the United States of America, 100, 8062–8067. Kumarasiri, J., & Gunasekarage, A. (2017). Risk regulation, community pressure and the use of management accounting in managing climate change risk: Australian evidence. The British Accounting Review, 49(1), 25–38. Mabkhot, M., Ferreira, M., Maffei, P., Podržaj, A., Mądziel, P., Antonelli, M., et al. (2021). Mapping industry 4.0 enabling technologies into united nations sustainability development goals. Sustainability, 13(5), 2560.

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Shi, L., Han, L., Yang, F., & Gao, L. (2019). The evolution of sustainable development theory: Types, goals, and research prospects. Sustainability., 11(24), 7158. https://doi.org/10.3390/su11247158 Shoker, A. (2021). Blockchain technology as a means of sustainable development. One Earth, 4(6), 795–800. https://doi.org/10.1016/j. oneear.2021.05.014 Tambovceva, T. & Tereshina, M. (2021). Comprehensive diagnostics of risk assessment for sustainable development of rural areas. In Engineering for Rural Development. Proceedings of the International Scientific Conference (Latvia). Latvia University of Life Sciences and Technologies. WBCSD. (2017). Sustainability and enterprise risk management: The first step towards integration. Accessed from https://docs.wbcsd. org/2017/01/WBCSD_Risk_Publication_2016.pdf

Corporate Social Responsibility to Manage the Risks to the Achievement of the SDGs in the Entrepreneurial Activities Nurgul K. Atabekova , Galina A. Dorofeeva, Anastasia A. Sozinova and Nadezhda K. Savelyeva

Abstract

JEL Codes

The purpose of this research is to reveal the specific features of the influence of implementation of corporate social responsibility on the management of risks to entrepreneurship’s sustainable development. This is done by the example of companies and leading countries in the sphere of the implementation of corporate social responsibility measures. Achievement of this purpose implies the use of the method of formalization and systematization and the statistical method. The scientific novelty of this research consists in the elaboration on the characteristics of the influence of corporate social responsibility on the management of risks of the environmental, economic and social character in the context of the UN Sustainable Development Goals. We analyse the experience of implementing the CSR measures and assess its effect on the risks to the SDGs within the entrepreneurial sector. This study allows identifying the main specific features of these measures and their connection with the sustainable development of countries. The revealed effect of the CSR measures on the studied process has shown that more substantial results require the development and use of more efficient practices and the involvement of a wider circle of the business environment in this process.

М14 · Q01 · Q56 · Q25 · Q42

Keywords

Corporate social responsibility · Sustainable development goals · Management of risks · Entrepreneurial sector · Development of human potential · Responsible production N. K. Atabekova (✉) International University of Kyrgyzstan, Bishkek, Kyrgyzstan G. A. Dorofeeva Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia A. A. Sozinova · N. K. Savelyeva Vyatka State University, Kirov, Russia e-mail: [email protected]; [email protected]

1

,

Introduction

Sustainable development is a harmonious and comprehensive process of qualitative changes in the activities of the country, regions and economic subjects, which ensures the economic well-being of businesses, labour conditions for companies’ personnel and living standards of the population. Achievement of the goals of this process is ensured due to the balance of the environmental, social and economic components of development. Resolution of the problems of managing the risk to the Sustainable Development Goals is closely connected to the main directions of implementing corporate social responsibility of the entrepreneurial sector at the national level. Given the importance of the role of business and the influence of corporate social responsibility on the achievement of the goals, the support for the ideas of such activities of entrepreneurship is initiated at the level of governments of many UN members. Also, there is a focus on the necessity to attract companies of different categories to its implementation. The realisation of the elements of corporate social responsibility predetermines the improvement of a country’s position in the sphere of socio-economic and environmental development. Accordingly, the positive experience of its implementation is peculiar for countries with a high level of sustainable development and could be adapted for counties that have significant risks in the implementation of these goals. The contribution to the increase in the results of social responsibility of business ensures the overcoming of the key risks of sustainable development of countries in the context of achieving the goals of human development management, within the goals of the economic and environmental components. The importance of the research on the effect of

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_62

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this phenomenon on the management of risks to the achievement of the Sustainable Development Goals in the activities of the entrepreneurial sector of countries predetermines the importance of this study. This work is aimed at determining the specifics of the effect of the implementation of corporate social responsibility on the management of risks to entrepreneurship’s sustainable development. The tasks solved in this work are as follows: characterising the elements of implementing corporate social responsibility in the entrepreneurial sector and assessing the effect of this phenomenon on risk management in the studied sphere.

Analysis of the influence of corporate social responsibility of the entrepreneurial sector on the management of the risks to the SDGs is based on the structuring of the directions of this influence. The economic, environmental, social and philanthropic directions are distinguished. Based on the research of the scientific, analytical and statistical materials of Cambridge University Press (2022) and Fordham and Robinson (2018), it has been found that these directions are directly connected with the management of the risks to the achievement of the SDGs. At that, the philanthropic components of the influence of CSR are studied in the context of the impact on the three above categories.

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3

Materials and Methods

The influence of corporate social responsibility on the reduction of sustainable development risks in the entrepreneurial sphere has been studied in many scholarly works: Crasto et al. (2020), Fordham and Robinson (2018), Gozdan and Sudolska (2021), Jain et al. (2021), Sehgal et al. (2020), Shuwaler et al. (2020), and Sicoli et al. (2019). Nevertheless, there is a need for a comprehensive assessment of the role of corporate social responsibility in the management of the risks to the achievement of the SDGs in entrepreneurship’s activities. In this work, we use the method of formalisation to identify the character of influence based on the research of analytical and statistical materials. The method of systematisation allowed systematising the main characteristics of the influence, based on the research of scientific materials and analytical and statistical data. The statistical method was used to reveal the state of factual indicators of the achievement of the Sustainable Development Goals. The stages of this research are as follows: 1. Identifying countries that are leaders in the sphere of implementation of the principles of corporate social responsibility at the level of the entrepreneurial sector. For this, we use the data of the world ranking of lead companies in this sphere (Aquire, 2022; WSJ, 2021); 2. Assessing the main elements of corporate social responsibility that are used in the functioning of the selected companies; 3. Identifying the effect of entrepreneurship’s implementing the studied elements of corporate social responsibility on the management of risks to the SDGs within the selected companies. The research is performed by the example of leading countries in the sphere of CSR: the USA, Sweden and Germany.

Results

Table 1 shows countries in which entrepreneurship has leading positions in the sphere of implementing corporate social responsibility for 2020–2021 (with the systematisation of these countries according to the indicators of development of their lead companies). The year 2021 saw a change in the configuration of the leading countries by the implementation of CSR at the level of the entrepreneurial sector (compared to 2020). Namely, Germany took the first position due to the activities of such enterprises as Adidas, Bosch and BMW; the second position was taken by the USA (nine companies); the third position— by India, due to the activities of IndiGo Reach; the fourth position—by Sweden, which ensured this result due to the functioning of IKEA. In 2020, the leading positions belonged to the USA and Ireland. The impact of the global economic crisis, aggravated by the consequences of the pandemic, did not allow Irish companies to ensure the leading positions in implementing the corporate social responsibility principles. Let us consider the key components of corporate social responsibility, which are declared and implemented in the activities of companies that occupy the leading positions in this sphere. Analysis of the analytical and scientific materials demonstrated that the most important features of implementing corporate social responsibility by Adidas (Germany) are the focus on eco-friendly products and ecologically responsible supply chains; development of human potential with the orientation toward the reduction of consumption of energy resources, water resources, decrease in environmental pollution and focus on the economic and social component (Crasto et al., 2020; Jain et al., 2021; Sicoli et al., 2019). The company participates in the production of clothing from recycled plastic; creation of logistical chains of materials and product supply without the use of chemical elements that threaten the environment, with the focus on production waste reduction; reduction of the environmental footprint of company employees due to

Corporate Social Responsibility to Manage the Risks to the Achievement of the SDGs. . . Table 1 Leading countries in which the entrepreneurial sector demonstrated high indicators of the implementation of corporate social responsibility for 2020–2021

Country Germany

USA

India Sweden Ireland

Company 2020

Microsoft Corp. HP Inc. Intel Corp. Texas Instruments Inc. Cisco Cummins AT&T Xerox Corp.

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2021 Adidas Bosch BMW Starbucks Mark Jacobs Ben and Jerry’s Apple Coca-Cola Alaska Airlines Dell Walt Disney Company Microsoft Corp. IndiGo Reach IKEA

Accenture PLC Medtronic

Source: Created by the authors based on Aquire (2022) and WSJ (2021)

financial bonuses for the decrease in the use of private cars and creation of labour conditions with the reduction of energy and water consumption by personnel; support for the protection of personnel rights in the sphere of labour safety and labour conditions; provision of fair wages; measures on innovative development of the main and accompanying infrastructure. The analysis has shown that the programme of economical use of water by personnel allowed reducing its consumption: in 2017—by 17%, in 2018—by 24%, in 2019—by 29% and in 2020—by 36% of the standard volume of water consumption during working hours. The company also achieved a goal of energy saving: in 2017, the decrease in energy consumption equalled 7%, in 2018—by 15%, in 2019—by 22% and in 2020—by 23%. The goals in the sphere of reduction of production waste and logistical operations waste were also achieved: in 2017, the volume of waste decreased by 10%, in 2018—by 22%, in 2019—by 30% and in 2020—by 30%. These measures allowed the company to restore after the 2020 pandemic (when the sales dropped by 24.9%), increasing the sales by 16.7% in 2021. The measures of corporate social responsibility of Adidas in the sphere of financial bonuses for personnel as a reward for the reduction of environmental footprint belong to the philanthropic and environmental categories. The growth of revenues is also an indicator of the development of the economic component of national sustainable development. At the modern stage, Adidas supports the sustainable development of Germany within the main components, which ensures the reduction of risks to the SDGs in the environmental, social and economic spheres. The effective social policy and the policy of personnel motivation ensure the protection from risks in the context of SDG (No poverty) SDG 2 (Zero hunger), SDG 3 (Good health and well-being) and SDG

8 (Decent work and economic growth). In terms of the measures in the environmental sphere, the protection from risks to SDG 6 (Clean water and sanitation) and SDG 7 (Affordable and clean energy) is ensured. Due to the focus on innovative development, the company supports the protection from risks to SDG 9 (Industry, innovation and infrastructure). Also, the company’s contribution to the fight against risks to SDG 12 (Responsible production and consumption) is important. Analysis of the activities of the German company Bosch has shown that the main elements of its corporate social responsibility are the measures to support the development of human potential: support for personnel’s initiatives on professional and personal growth; support for the programmes of development of personnel of national minorities (Schwager, 2018). Despite the significant results in the implementation of the above directions, aimed at managing the risks to SDGs 1–4 and SDG 10 (Reduced inequalities), the company continues its work on new strategic directions in the environmental sphere. Within the strategy of implementing corporate social responsibility, an American company Starbucks declares and realises the following elements: investing in its fund for the provision of clean water through sales revenues (the goal is to satisfy the need for clean water for one billion people, in the USA and around the world); providing personnel with the opportunities to raise their skills and develop professional growth in the company (grants for training, courses, etc.) (Gozdan & Sudolska, 2021). The focus on these indicators allows ensuring the protection from and management of risks to SDG 6 (Clean water and sanitation) and SDG 10 (Reduced inequalities).

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Within the approach to corporate social responsibility, Microsoft Corp. (USA) implements the following aspects: measures on advanced training of personnel and stimulation for future employment in case of possible organisational and economic transformations; implementation of the eco-oriented approach on the reduction of company and personnel’s energy consumption (Sehgal et al., 2020). The measures in the sphere of advanced training and the formation of personnel’s readiness for possible changes are implemented in the form of various courses and training performed by the outsourced partner companies. The use of the elements of corporate social responsibility in the sphere of advanced training of personnel and support for their future employment is the aspect of managing the risks to SDG 8 (Decent work and economic growth), while implementation of the environmental measures is the aspect in managing the risks to SDG 7 (Affordable and clean energy). IKEA (Sweden) focuses on implementing the following aspects of corporate social responsibility: the use of eco-friendly materials in production, thorough checks of contractors who participate in the logistical chains of supply and transportation (management and reduction of risks to SDG 12 (Responsible production and consumption)), provision of support, through own funds, for many families in Sweden and other countries in the context of the fight against poverty (SDG 1 (No poverty)) (Shuwaler et al., 2020).

4

Discussion

Based on the performed research and analysis of the studied materials, we have systematised the character of the influence of corporate social responsibility of entrepreneurship on managing the risks to the Sustainable Development Goals (by the example of companies of Germany, the USA and Sweden). The research has shown that in 2021, Germany was ranked sixth in the Sustainable Development Ranking. In the implementation of corporate social responsibility in the entrepreneurship activities of Germany, the largest effect was gained from measures on support for the well-being of personnel and provision of clean energy (SDG 1 and SDG 7). As for the influence of American business on managing the given risks, it is possible to state that the studied measures of the companies in the sphere of implementing the strategies of corporate social responsibility allow ensuring significant results in the sphere of managing the risks to SDG 6 (Clean water and sanitation), and supporting the protection from and management of the risks to SDGs 1, 3 and 8. The research also showed that Sweden was ranked third by the Sustainable Development Ranking; the largest contribution of entrepreneurship to the measures of corporate social responsibility is connected to the protection of the population

from poverty, which ensures the fight against and management of risks to SDG 1 (No poverty.

5

Conclusion

The study of corporate social responsibility to manage the risks to the achievement of the SDGs in entrepreneurial activities has shown that certain elements of this phenomenon have a high or significant influence on the management of risks to the UN SDGs, while other elements do not facilitate the effective sustainable development. This depends on the size of a country and the number of subjects of entrepreneurship that have taken obligations in the sphere of corporate social responsibility, as well as on the use of the approaches to their implementation. This dependence is confirmed by the fact that the largest number of lead companies in the sphere of implementation of corporate social responsibility are located in the USA, while it is ranked only 41st in the Sustainable Development Ranking. The fact of achievement of indicators that are not very high is caused by the fact that the orientation toward the entrepreneurial sector’s acceptance of obligations in the sphere of corporate social responsibility is observed mainly with large enterprises, while small and medium enterprises do not use this approach much. Rather high indicators of implementing the measures of the studied phenomenon and the effectiveness of its influence on sustainable development of countries (examples of Germany and Sweden) are connected to the fact that the EU countries have their concept of sustainable development and use the policy of shared responsibilities with business.

References Aquire, S. (2022). 14 best socially responsible companies that are making impact. Accessed June 29, 2022, from https://donorbox. org/nonprofit-blog/best-corporate-responsibility-companies Cambridge University Press. (2022). Sustainable development report. Accessed May 23, 2022, from https://dashboards.sdgindex.org/ rankings Crasto, S. G., Kee, D. M. H., Huan, A. T. Y., Xin, C. W., Juin, H. X., Man, L. K., & Pandey, D. (2020). Product innovation by Adidas group through sustainability. Journal of Community Development in Asia, 1. Accessed June 29, 2022, from http://www.ejournal.aibpm. org/index.php/JCDA/article/view/702 Fordham, A. E., & Robinson, G. M. (2018). Mapping meanings of corporate social responsibility – An Australian case study. International Journal of Corporate Social Responsibility 3, 14. Accessed June 29, 2022, from https://jcsr.springeropen.com/articles/10.1186/ s40991-018-0036-1#citeas Gozdan, E., & Sudolska, A. (2021). Exploring company’s activities in the field of CSR: The case of Starbucks. Journal of Corporate Responsibility and Leadership, 2, 29–47. Jain, P., Chou, M. C., Fan, F., & Santoso, M. P. (2021). Embedding sustainability in the consumer goods innovation cycle and enabling tools to measure progress and capabilities. Sustainability, 13, 6662.

Corporate Social Responsibility to Manage the Risks to the Achievement of the SDGs. . . Accessed June 29, 2022, from https://www.mdpi.com/2071-1050/ 13/12/6662 Schwager, B. (2018). The Bosch Group’s approach to innovation and sustainability communication: Social responsibility as competitive advantage. Innovation Management and Corporate Social Responsibility, 2018, 181–194. Sehgal, G., Kee, D. M. H., Low, A. R., Chin, Y. S., Woo, E. M. Y., Lee, P. F., & Almutairi, F. (2020). Corporate social responsibility: A case study of Microsoft Corporation. Asia Pacific Journal of Management and Education, 3, 1. Accessed June 29, 2022, from https:// ejournal.aibpm.org/index.php/APJME/article/view/744

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Shuwaler, A. A., Quttainah, M. A., Kee, D. M. H., Kei, C. M., Qi, E. J., Qu, G., Wen, E. C., Saxena, M., & Pandey, R. (2020). IKEA’s corporate social responsibility. International Journal of Tourism and Hospitality in Asia Pacific, 1, 70–77. Sicoli, G., Bronzetti, G., & Baldini, M. (2019). The importance of sustainability in the fashion sector: ADIDAS case study. International Business Research, 12(6), 41–51. WSJ. (2021). Top companies for social responsibility. Microsoft heads this list from the management top 250 ranking. Accessed June 29, 2022, from https://www.wsj.com/articles/top-companies-forsocial-responsibility-11617137132

Social Entrepreneurship as an Institute of Sustainable Development Risk Management Juliana А. Kitsai , Svetlana E. Karpushova and Anastasia I. Smetanina

, Elena S. Petrenko

Abstract

JEL Codes

This paper aims to systematise the specifics of the functioning of social entrepreneurship as an institute of managing the sustainable development risks in developed countries of the world. The methods used include system analysis, statistical analysis and ranking method. We also use the indices of international rankings, which include Social Entrepreneur and Sustainable development. The novel approach of this research consists in elaborating the theoretical framework, which describes the specific features of the formation of the institute of social entrepreneurship as a driver of managing the risks to the SDGs in developed countries of the world. We present the models of national social entrepreneurship, identify its influence on the reduction of risks to the SDGs, distinguish, and characterise the achievements of the considered countries in the context of the implementation of these goals. We substantiate the possibility to adapt the best practices of implementing the studied models and prove the necessity for the systemic adaptation of the directions of development to the conditions of the social environment, legislation and socio-economic development of countries.

Н53 · I38 · L31 · M14 · Q01 · Q56

Keywords

Social companies · Managing risks to the SDGs · Social entrepreneurship · Outsourcing · Network models J. А. Kitsai (✉) Immaniul Kant Baltic Federal University, Kaliningrad, Russia S. E. Karpushova Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia E. S. Petrenko Plekhanov Russian University of Economics, Moscow, Russia A. I. Smetanina ANO Institute of scientific communications, Volgograd, Russia

1

,

Introduction

The UN member countries’ adopting the concept of sustainable development implies the orientation of humanity and all of its systems toward the provision of the balance of the three main spheres: environmental, economic and social (Bogoviz et al., 2021). The social component, presented within the concept of sustainable development, includes a wide range of goals, which are connected with the necessity to overcome poverty and strive toward well-being and health of citizens, the problems of famine, gender and educational spheres, provision of employment and reduction of social inequality (Popkova & Sergi, 2020). Countries adopt certain strategic parameters for solving social problems, connected with the achievement of goals in this direction and management of risks to socially sustainable development in all spheres (Shabaltina et al., 2022). The management of the social component of the SDGs and its risks envisages the creation of the mechanism of government’s providing the opportunities to develop human potential and creation of a certain set of social guarantees and services that are connected with employment, the system of labour protection, education and social protection (Zabaznova et al., 2020). Achievement of tasks in the management of risks to the SDGs in this sphere requires the creation of a certain infrastructure, which development can be ensured by the government or by the entrepreneurial sector. Entrepreneurial subjects of most countries implement activities in the sphere of social services of a wide range (educational, psychological, medical, services on training, retraining and employment of personnel, other services in this sphere) (Kitsai et al., 2021). Changes that take place under the influence of the development of demand and redistribution of functions led to the formation of the social entrepreneurship market, which, at

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_63

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the modern stage, has become a comprehensive environment for managing the social risks to the SDGs (Popkova & Sergi, 2021). Due to the above, research of the specifics of social entrepreneurship in the context of managing the risks to the SDGs acquires particular importance.

2

Materials and Method

A significant contribution to the theoretical, methodological and empirical studies of the directions of social entrepreneurship and assessment of its role in the management of the SDGs was done in Andersen et al. (2021), Barraket et al. (2017), Barton (2019), Corbière et al. (2019), Gawell (2021), Karré (2021), Kovanen (2021), Petrella et al. (2021), Sengupta et al. (2019), and Yeasmin and Koivurova (2021). The materials of the above works demonstrate the development of studied problems at the level of certain countries, but there is a need to form a universal set of peculiarities of formation of social entrepreneurship as a modern institute of managing the risks to the SDGs. In this research, system analysis is used for the complex assessment of the specific features of the formation of social entrepreneurship at the national level. Statistical analysis allows assessing the statistical data of the development of

indicators of social entrepreneurship and sustainable development in the given countries. The ranking method is used to identify the ranks of countries in the sphere of social partnership and sustainable development. In this research, we use the materials of the international ranking of sustainable development of countries (Cambridge University Press, 2022) and the international ranking of countries by the indicator of social entrepreneurship (Poll, 2022).

3

Results

Let us assess the impact of the development of social entrepreneurship in the management of risks to the SDGs at the level of developed countries (Table 1). The management of risks to the SDGs is evaluated with the help of the Sustainable Development Index; the level of development of social entrepreneurship is identified using the Social Entrepreneur Index. The assessment of the results (Table 1) demonstrates that Canada has the highest indicators of development of social entrepreneurship (first position in the international ranking), which is largely due to the government’s approach to regulating the activities of subjects in this sphere and the innovative approach to the development and implementation

Table 1 Dependence of the management of risks to the SDGs on the development of social entrepreneurship in developed countries

Country Canada

Social Entrepreneur (Rank) (2019) 1

Sustainable development (Rank) (2019–2021) 20 29 21

Australia

2

38

38

35

France

3

4

7

8

Belgium

4

16

18

5

Denmark

6

1

2

3

Netherlands

7

9

17

11

Finland

8

3

1

1

Sweden

16

2

3

2

Germany

21

6

6

4

Character of influence Positive. Measures of influence: activation of the networks of companies in the social sector that work with indigenous communities and population with special needs; employment of people with special needs. Positive. Development of social companies as network territorial local structures and intermediary structures (hiring personnel for the provision of services in the social sphere) Significant. Social entrepreneurship is based on the associations of social companies that are controlled by the government and non-profit social organisations that function based on government and non-government grants. Positive. The system of social entrepreneurship is similar to the French one. Development of non-profit social organisations with a strong professional basis. Significant. Development of social companies based on four sectoral platforms: employment; education; medical services; support for specific groups of population; development of cities. The effectiveness of development is based on the network interaction between companies, which leads to improvement and digitalization. Positive. The system of social entrepreneurship is similar to the French one. The development of non-profit social organisations with the focus on start-ups that raise their competitiveness in the market. Positive. Development of social companies that receive tax subsidies from the government. Positive. Outsource of services in the social sector—by the government from private business. Positive. The system of social entrepreneurship is similar to the French one. Development of non-profit social companies with the focus on high responsibility before consumers and the government.

Source: Compiled by the authors based on Andersen et al. (2021), Barraket et al. (2017), Barton (2019), Corbière et al. (2019), Gawell (2021), Karré (2021), Kovanen (2021), Petrella et al. (2021), Sengupta et al. (2019), and Yeasmin and Koivurova (2021)

Social Entrepreneurship as an Institute of Sustainable Development Risk Management

of strategies of development. The main conditions that facilitate the effective development of this phenomenon in Canada include support from the government in the form of tax subsidies; affordable credits; subsidies for hiring handicapped people (Barton, 2019). Australia demonstrated high indicators of development of social entrepreneurship (second position), which was due to government support, support from society at the local level and the work of skilled personnel (social workers, psychologists, medical personnel and HR specialists). A high level of organisation of the social companies’ activities allowed achieving a certain improvement in the level of managing the risks to the SDGs (38th position in 2019–2020 and 35th position in 2021). Belgium, Germany, France and the Netherlands have high positions in the ranking of social entrepreneurship (Table 1). Successful development of the social companies in these countries is due to the sustainable development of the social sector and traditions of the orientation toward government financing of this sphere. These countries also have social companies that are financed from non-profit funds. Such financing does not exceed 50% of the need, i.e., there is a dependence on the government. The practices of development and activities of social companies in Belgium, Germany, France and the Netherlands allowed raising the level of the management of risks to the SDGs. The activities of these companies in Belgium allowed reducing the risks to SDG 1 (reducing poverty due to employment in these companies and achievement of decent work). Germany holds the 21st position in the world ranking of social entrepreneurship (Table 1). The aggravation of the economic situation in Germany because of the pandemic in 2021 led to the growth of requirements for the responsibility of social companies (care for sick and elderly people and people with special needs). Similarly to Belgium, there was an improvement in SDG 8. The Netherlands improved its position in the world ranking of social entrepreneurship (Table 1) in the context of managing the risks to the SDGs (17th position in 2020 and 11th position in 2021), with the minimisation of risks to SDG 1 and SDG 8. Denmark is ranked sixth in the world ranking of social entrepreneurship (Table 1), which allowed the country to have high indicators in managing the risks to the SDGs in 2019–2021. Due to the rather high level of social entrepreneurship, Finland and Sweden achieved and supported good results in managing the risks to the SDGs. For Finland, this includes results in the improvement of the educational sphere (SDG 4), reduction of poverty among immigrants (SDG 1) and receipt of decent work (SDG 8). Sweden improved social services by outsourcing them to private social companies, which allowed minimising the risks to SDG 1 and SDG 8.

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Let us dwell on the specifics of social entrepreneurship in countries which did not demonstrate its positive influence on the reduction of risks to the SDGs. According to Sengupta et al. (2019), Canada is oriented toward the development of the networks of companies involved in the provision of a wide spectre of social services to the indigenous population and people with special needs. Such a form of social entrepreneurship can be defined as a network; its participants are companies that are integrated into network structures by the geographical and sectoral attributes, with decentralised governance. Also, social entrepreneurship is an additional direction of development of many network companies in the country, which hire people with special needs (Corbière et al., 2019). Such companies use an approach to teamwork with personnel and apply specific devices that simplify communication, support and teaching. The entrepreneurial structures’ focus on hiring such personnel helps it to integrate into the modern labour market, in which they are usually non-competitive. This form of social entrepreneurship can be defined as a model of personnel integration. The implementation and functioning of the network and personnel models of integration of social entrepreneurship in Canada allowed ensuring the improvement of managing the risks to SDG 1, SDG 3, SDG 4 and SDG 8. Analysis of the characteristics of social entrepreneurship in Australia (Barraket et al., 2017) shows that at the modern stage (starting in 2010), the network of local and intermediary forms of development in this direction has gained popularity. These specific features of the formation of social entrepreneurial structures are connected with the gradual movement away from the monopolistic role of the government in implementing the main functions in the social sector (medicine, education and help with care and services for certain categories of citizens). It is possible to state that network local companies are involved, equally with the government, in the sphere of provision of services for local communities. Since this category of consumers often requires subsidies, the intermediary social companies, which are oriented toward 100% commercialisation, do not participate in the provision of services to such citizens in Australia. According to Karré (2021) and Kovanen (2021), France, Belgium, the Netherlands and Germany have similar models of social entrepreneurship. Despite certain differences (high qualification of personnel in Belgium, innovative startups in the Netherlands, high functional and financial responsibility in Germany), these countries have an administrative government-oriented model of development with certain characteristics of philanthropy (participation of non-profit funds). According to Andersen et al. (2021), Denmark is peculiar for a network multi-vector form (four sectoral platforms of social companies) of social entrepreneurship. Social

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enterprises, like in many countries of the EU, have government financing, though there is also a focus on market and commercialisation. The level of population’s involvement with the formation of the companies’ activities at the local level (creation of lists of people that require care, formation of local initiatives for the development of cities and territories, etc.) is also very high. Social enterprises in Finland develop according to the administrative government-oriented model of development (Yeasmin & Koivurova, 2021). The government’s approach to the provision of subsidies for the activities of subjects in this sphere allows for reducing unemployment and crime rate and stimulating the cultural integration of immigrants. The system of social entrepreneurship in Sweden is based on the administrative government-oriented model of development with the elements of outsourcing (Gawell, 2021). For the provision of many services in the social sphere, the government selects companies that specialise in professional activities in a certain direction (medical services, education, care for certain categories of people, employment of certain groups of people, etc.). The functioning of specialised companies is more effective compared to government structures, due to the level of professionalism, motivation and methods of work.

4

Discussion

We were able to identify the specific features of the development of social entrepreneurship in countries that ensured positive management of the risks to the SDGs. These features (models) of social entrepreneurship, which formation and implementation can be adapted in developing countries, including the following:

intermediaries (companies, people) are attracted to the execution of certain social services. The focus on this model envisages the use of paid services by consumers; – Administrative government-oriented model of social entrepreneurship with possible characteristics of philanthropy and outsourcing. The use of such a model is possible in countries with a socially-oriented economy.

5

Conclusion

It is possible to state that the designated models of social entrepreneurship have large prospects for implementation given their optimal adaptation to the conditions of the development of the economic system, regulatory framework and specifics of the social sphere of countries. The use of the intermediary model of social entrepreneurship would be difficult in countries with low GDP per capita and low levels of consumption, though it might be applied in countries with quickly developing economies (e.g., China). The network models of social entrepreneurship of the local and personnel type could be adapted in countries that have substantial differences in the ethnic composition and countries with national communities that have difficulties with integration into the main community. Using the administrative government-oriented models of social entrepreneurship of the outsourcing type, a government may solve the problem of the provision of quality professional services in the social sphere. Administrative government-oriented models of social entrepreneurship with the elements of philanthropy may be used under the conditions of wide dissemination of social corporate responsibility.

References – Network and personnel model of the integration of social entrepreneurship. The focus on the network model implies the functioning of local networks of social companies, which can support the government in the resolution of issues on social services or provision in distant territories or for national minorities; sectoral networks that can act in different territories; multi-vector networks, which develop in the context of sectoral direction. As for the personnel model of integration, it may be combined with the network model and imply the hiring of personnel from the local community. Implementation of such models influences the resolution of a wide range of problems in the sphere of managing the risks to the SDGs (no poverty, decent work, etc.); – Intermediary model of social entrepreneurship is connected with mediation in the sphere of provision of services in the social sector. According to this model,

Andersen, L. L., Hulgård, L., & Jakobsen, G. (2021). Social enterprise in Denmark. Historical, contextual and conceptual aspects. Social Enterprise in Western Europe, 1, 37–51. Barraket, J., Douglas, H., Eversole, R., Mason, C., McNeill, J., & Morgan, B. (2017). Classifying social enterprise models in Australia. Social Enterprise Journal, 13(4), 345–361. Barton, T. (2019). Small business and social enterprise: To thrive not fail. Papers in Canadian Economic Development, 18, 17–43. Bogoviz, A. V., Shokhnekh, A. V., Petrenko, E. S., & Milkina, E. A. (2021). Social effectiveness of the market economy: Measuring and management. International Journal of Sociology and Social Policy, 41(1–2), 167–177. https://doi.org/10.1108/IJSSP-03-2020-0060 Cambridge University Press. (2022). Sustainable development report. Accessed July 29, 2022, from https://dashboards.sdgindex.org/ rankings Corbière, М., Villotti, Р., Dewa, C. S., Sultan-Taïeb, H., Fraccaroli, F., Zaniboni, S., Durand, M.-J., & Lecomte, T. (2019). Work accommodations in Canadian social firms: Supervisors’ and workers’ perspectives. Canadian Journal of Community Mental Health, 38(1), 37–56. https://doi.org/10.7870/cjcmh-2018-026

Social Entrepreneurship as an Institute of Sustainable Development Risk Management Gawell, М. (2021). Social Enterprises in Sweden. Intertextual consensus and hidden paradoxes. Social Enterprise in Western Europe, 13, 218–234. Karré, Р. М. (2021). Social enterprise in Belgium, Germany and The Netherlands where the old meets the new. Social Enterprise in Western Europe, 17, 288–300. Kitsai, J. A., Sytnik, A. A., Kabanov, O. V., Sakhbieva, A. I., Latysheva, N. A., Okhotnikov, I. V., & Sibirko, I. V. (2021). Socio-economic development and its impact on the ecological environment in the Russian Federation. Caspian Journal of Environmental Sciences, 19(5), 981–989. https://doi.org/10.22124/CJES.2021.5321 Kovanen, S. (2021). Social entrepreneurship as a collaborative practice: Literature review and research agenda. Journal of Entrepreneurship, Management and Innovation, 17(1), 97–128. Accessed July 29, 2022, from https://jemi.edu.pl/vol-17-issue-1-2021/social-entre preneurship-as-a-collaborative-practice-literature-review-andresearch-agenda Petrella, F., Richez-Battesti, N., Solórzano-García, М., & Ferreira, S. (2021). Social enterprise in France, Spain and Portugal: Between path dependence and institutional creation. In J. Defourny & M. Nyssens (Eds.), Social enterprise in Western Europe. Theory, models and practice (Vol. 16, pp. 271–287). Springer. Poll. (2022). The 10 best countries to be a social entrepreneur 2019. Accessed July 29, 2022, from https://poll2019.trust.org/

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Popkova, E. G., & Sergi, B. S. (2020). Social entrepreneurship in Russia and Asia: Further development trends and prospects. On the Horizon, 28(1), 9–21. https://doi.org/10.1108/OTH-09-2019-0065 Popkova, E. G., & Sergi, B. S. (2021). Dataset modelling of the financial risk management of social entrepreneurship in emerging economies. Risks, 9(12), 211. https://doi.org/10.3390/risks9120211 Sengupta, U., Vieta, M., & McMurtry, J. J. (2019). Indigenous communities and social enterprise in Canada. SocArXiv, 1. Accessed July 29, 2022, from https://osf.io/preprints/socarxiv/t3ma8/ Shabaltina, L. V., Shchukina, N. V., Surkova, O. A., & Smetanina, A. I. (2022). A framework for reconstructive digital farming for areas with unfavourable climatic conditions for agricultural entrepreneurship. Environmental Footprints and Eco-Design of Products and Processes, 2022, 215–222. https://doi.org/10.1007/978-981-191125-5_25 Yeasmin, N., & Koivurova, T. (2021). Social enterprises of immigrants: A panacea for the Finnish labour market? South Asian Journal of Business and Management Cases, 10(2), 180–195. Zabaznova, T. A., Patsiuk, E. V., Shchukina, N. V., Karpushova, S. E., & Surkova, O. A. (2020). The role of small and medium businesses in the formation of pleasure economy. Lecture Notes in Networks and Systems, 111, 283–290. https://doi.org/10.1007/978-3-03039797-5_29

Modern Issues in Sustainability Reporting Tatyana Y. Druzhilovskaya , Emilia S. Druzhilovskaya Stozharova , and Nikolai A. Dobrolyubov

Abstract

JEL Code

Purpose: The purpose of this paper is to identify modern issues in sustainability reporting (SR) and identify ways to resolve them. Methodology: When conducting research, the authors analyzed the SR of modern organizations, presented on the official websites of these organizations. At the same time, the authors explored the SR of organizations various types of activities from different countries of the world, prepared for 2019–2020. This approach has been used in order to obtain results on the issues in sustainability reporting that take place in various modern organizations. In carrying out the research, the following methods were used: comparison, analysis and synthesis, grouping method and logical approach. Results: The authors analyzed the current practice of sustainability reporting in different countries and identified the main modern issues in this area. These issues were systematized and combined into several large groups. As a result of the research, the authors presented proposals for solving the identified issues. Conclusions/recommendations/value: The proposals and recommendations formulated by the authors can be applied in improving the regulation of standards for the formation of SR both at the national and international levels.

M41

Keywords

Sustainability · Sustainability reporting (SR) · Sustainability reporting items · Standards · Issues

T. Y. Druzhilovskaya (✉) · E. S. Druzhilovskaya · T. V. Stozharova Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia N. A. Dobrolyubov JSC Vladbusinessbank, Nizhny Novgorod, Russia

1

, Tatyana V.

Introduction

The importance of the formation of high-quality information in sustainability reporting (SR) of organizations is beyond doubt. However, the studies carried out by us make it possible to conclude that today in practice there are enormous discrepancies in the preparation of sustainability reports. As a result, interested users cannot obtain comparable information on the activities of organizations in the field of sustainability. This paper explores the main issues that arise in practice in the formation of sustainability reports by both Russian and foreign organizations. Based on the analysis of these issues, the latter are combined into several large groups. The paper also presents proposals for solving the identified issues. These proposals can be applied to the compilation of sustainability reports by both Russian and foreign organizations.

2

Methodology

In carrying out research, we used the sustainability reports of modern organizations, posted on their official websites. In doing so we analyzed the above-mentioned reports of the largest organizations prepared for 2019–2020. To conduct research, we used the sustainability reports of both Russian and foreign organizations of various types of activities. We applied this approach in order to obtain results on the issues of forming the above-mentioned reports, which are typical for various modern organizations. Our research has made it possible to conclude that in recent years, in the scientific literature, along with an analysis of the problems associated with financial reporting items

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_64

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(Al-Salam et al., 2020; Druzhilovskaya et al., 2020; Kulikova et al., 2018, 2020), the issues of generating information in non-financial reporting (sustainability reporting) are actively discussed (Al-Shaer & Hussainey, 2022; Di Tullio & La Torre, 2022; Hasan et al., 2022; Kumar et al., 2021; Mani, 2022; Rashed et al., 2022; Toth et al., 2022; Zieba & Johansson, 2022). At the same time, different authors pay attention to various aspects in this area. For example, a number of scientists consider the specifics of sustainability reporting in different countries. Such papers include the work by Di Tullio P. and La Torre M. (2022) exploring the features of this reporting in Italy, the work by Mani M. (2022) investigating the specifics of SR in India, the work by Al-Shaer H. and Hussainey K. (2022) examining the features of this reporting in UK, the work by Hasan A., Hussainey K. and Aly D. (2022) researching the specifics of SR in Pakistan and other papers. The types of organizations in relation to which scientists consider the formation of sustainability reports are also not the same. For example, Toth A., Suta A. and Szauter F. (2022) analyze these aspects in relation to the automotive industry, Zieba M. and Johansson E. (2022) explore the above-mentioned aspects applied to the airline industry, Kumar K., Kumari R. and Kumar R. (2021) investigate these aspects in environmentally sensitive industries, Rashed A.H., Rashdan S.A. and Ali-Mohamed A.Y. (2022) examine the above-mentioned aspects in relation to the industrial sector. The works of these, as well as many other specialists, contain in-depth studies of the formation of sustainability reports. However, today there are still significant issues in this area that need to be addressed. Our study is aimed at solving these issues. The following methods were used in the research: comparison, analysis and synthesis, grouping method and logical approach.

3

Results

We researched the practice of sustainability reporting of the largest Russian and foreign organizations in various fields of activity. As a result, we have identified significant differences in such formation both by organizations carrying out the same types of activities and organizations of different types of activities, both organizations of one country and organizations from different countries of the world. These differences start already with the presence of separate sustainability reporting. As our research has shown, not all organizations provide such reporting. At the same time, a number of the organizations we reviewed reflect part of the information on activities in the field of sustainability in other types of reporting (for example, in a quarterly report for the fourth quarter). In practice, the titles of sustainability reports also differ significantly. Table 1 systematizes examples of inconsistencies in these titles that we identified in 58 Russian organizations. As can be seen from Table 1, the differences in the titles of the above reports are by no means always limited to one or two words (for example, “in the field”, “on activities”). For some organizations, these titles differ cardinally. For example, some organizations use the title “Sustainability Report”, other organizations call this document “Corporate Responsibility Report” and some organizations prefer to utilize the title “ESG Report”. For some organizations, the report is called “Report about Sustainability” on the website, but when you download such a file, a document with the title “Public Annual Report” opens. Examples of inconsistencies can be given further. As a result, it is not clear to interested users which reports should be utilized to obtain information about the activities of organizations in the field of sustainability.

Table 1 Examples of differences in the titles of sustainability reporting in various organizations Sustainability reporting titles Report about Sustainability Report in the Field of Sustainability Report on Activities in the Field of Sustainability Report on Sustainability: Highlights Social Responsibility and Corporate Sustainability Report Corporate Responsibility Report ESG Report Sustainability Report (in this case the organization directly uses the title in English) Public Annual Report Source: Developed and compiled by the authors

Number of organizations using these titles 39 6 3 1 1 2 4 1 1

Percentage of such organizations (taking into account rounding) 67 10 5 2 2 3 7 2 2

Modern Issues in Sustainability Reporting

The solution to this issue, from our point of view, can be the establishment of a single title for the above reporting. In our opinion, it is advisable to fix such a title in the standards for the preparation of this reporting. Pay attention to the fact that today there are no uniform sustainability reporting standards for all existing organizations. Such standards should be international standards in this area. At the same time, today it is also advisable to consider the possibility of creating national sustainability standards, including Russian sustainability standards. The next group of issues in sustainability reporting is related to the sections of such reporting. As our research has shown, different organizations have significantly different sections of this reporting. Examples of such differences are shown in Fig. 1. Note that in this figure we have replaced

371

the names of the considered organizations with conventions: “A”, “B” and “C”. Figure 1 shows that the sections of sustainability reporting differ significantly in various organizations. For example, in SR organization “B” has a subsection on energy saving, while other organizations do not. Organization “A” has a separate section devoted to determining the material topics of the Report in its SR. Organization “B” discloses such information not in the SR section, but in appendices to its SR. In the SR of organization “C” there are no similar section or appendices. Pay attention to the fact that even in the same sections, organizations represent different subsections. For example, in the section “Management system for sustainability” of the SR of organization “A”, there are no subsections on ethics and

"A"

•General informaon. Stakeholder engagement. The procedure for determining material topics. •1. Management system for sustainability (SU) in Group “A”: 1.1. Management of acvies in the field of SU. 1.2. Group “A” Contribuon to Achieving the UN Sustainability Goals in 2020. •2. Countering the Covid-19 pandemic and its consequences: 2.1. Group “A” spending on prevenng the spread of coronavirus infecon. 2.2. Coordinaon of acvies to prevent the spread of coronavirus infecon. 2.3. Safety of employees and ensuring the connuity of producon. 2.4. Engagement with stakeholders during a pandemic. •3. About Group “A”: 3.1. General informaon about Group “A”. 3.2. Mission and strategy. 3.3. Group “A” business model. 3.4. Compliance management in Group “A”. 3.5. Contribuon to the Russian economy. 3.6. Innovave acvity in Group “A”. 3.7. Quality management and interacon with consumers in Group “A”. •4. Responsible for the well-being of our planet: 4.1. Management of acvies in the field of environmental protecon and climate conservaon. 4.2. Environmental protecon. 4.3. Measures for climate conservaon. •5. In dialogue with society: 5.1. Personnel of “A”: partnership is the basis of interacon. 5.2. Producon safety in Group “A”. 5.3. Group “A” and local communies. •Appendices

"B"

•Business model. Geography of presence. Strategic goals of Group “B” in the field of SU. Material topics and issues of the Report. Our contribuon to the goals of UN Sustainability Goals in 2020. About the Report. About the Company: events and results of the year. •SU management system: Message from the Chairman of the Commiee on Strategy, Investments, SU and Climate Adaptaon. Control system. Ethics and human rights. Stakeholder engagement. SU principles in producon projects abroad. Supply chain. Technology. •Climate change: Carbon management system. Reporng. Climate strategy. Reducing methane emissions. APG ulizaon and flaring reducon. Energy saving. Renewable energy sources. •Safety: Integrated control system. Industrial safety. Reliability of pipeline transport in Russia. Spill prevenon at sea. Occupaonal safety and health. •Environment: Our goals. Water resources. Emissions. Waste. Biodiversity conservaon. •Our employees: Our goals. Protecng employees during a pandemic. Labor relaons. Characteriscs of the staff. Social polics. Educaon and development. •Society: Product quality and customer interacon. Priories of foreign social policy. Support for the indigenous peoples of the North. •Applicaons, incl. on determining the material topics of the Report

"C"

•UN Sustainability Goals. Message from the Chairman of the Board of Directors. Group “C” and SU. The producon acvity of the company in the world. Stakeholder engagement. •Environment: Extract from Energy and Carbon Report. Recycling of plasc waste. •Social environment: Security. Health and movaon of staff. Human rights. Contribuons to socio-economic development. •Corporate governance: Business ethics and reliability. Leading role of the Board of Directors. Interacon with government agencies. Case study: fighng the Covid-19 pandemic. On the highlights of the Report on SU. Indicators of producon and economic acvity

Fig. 1 Examples of inconsistencies in sections of sustainability reporting in various organizations. Source: Developed and compiled by the authors

372

human rights, supply chain, technology, stakeholder engagement and sustainability principles in production projects that are presented in the SR of organization “B”. At the same time, the such section is completely absent in the SR of organization “C”. Examples of inconsistencies can be given further. It can even be said that the sections of sustainability reporting of various organizations differ so significantly from each other that it is easier to name the overlapping sections than to list the mismatched sections. As a result, interested users do not receive complete and comparable information about the activities of organizations in the field of the sustainability and cannot make the right decisions they need. In our opinion, the solution to such issues can be the establishment of a clear list of sustainability reporting sections in uniform standards. Recall that international standards in this area, as we noted above, can become these standards. At the same time, it is also advisable to consider the idea of developing national sustainability standards, including Russian sustainability standards. Another group of issues in the formation of sustainability reporting is related to the items of this reporting. Our studies have shown that the items themselves differ significantly in the SR of various organizations. Examples illustrating these inconsistencies are shown in Fig. 2. Note that in this figure, we have changed the names of organizations to conventions: “D” and “E”. As can be seen from Fig. 2, organizations “D” and “E” presented almost completely different items in the “Business Model” section of the SR. Examples of current inconsistencies in the SR items of modern organizations can be given further. As a result, it is often very difficult for interested users to understand information about the activities of organizations in the field of sustainability, which, as a result, significantly complicates, and often prevents them from making the right decisions. Our conclusions are also confirmed by our survey of sustainability reporting users. The results of this survey are presented in Table 2. As can be seen from Table 2, the majority of respondents believe that the sustainability reporting items of modern organizations are not sufficiently informative and useful for making the right decisions based on such items. The

T. Y. Druzhilovskaya et al.

significant part of the respondents is in favor of the need to improve approaches to the formation of information presented in the SR. From our point of view, to eliminate the identified issues it is advisable to establish an exact set of items that should be disclosed in specific sections of SR in the aforementioned sustainability standards. At the same time, in such standards it can be added that an organization can include additional sections and items in the SR if, from the point of view of this organization, they are necessary for users to correctly understand the activities of this organization in the field of sustainability. Also, in our opinion, in the aforementioned sustainability standards an example of SR or even examples of SR for organizations of various activity fields can be given. At the end of the research, we express the hope that the proposals presented by us can be used in the process of improving the formation of sustainability reporting in modern organizations.

4

Conclusion

Our research showed that today there are significant issues in the formation of sustainability reporting. The issues identified by us can be divided into four large groups: 1. issues of the presence of separate sustainability reporting; 2. issues of inconsistencies in the titles of sustainability reporting in various organizations; 3. issues of significant differences in the sections of sustainability reporting in modern organizations; 4. issues of significant discrepancies in the items of sustainability reporting in different organizations. The identified issues certainly prevent interested users from obtaining the information they need about the activities of organizations in the field of sustainability, and therefore making the right decisions. In order to eliminate these issues, in this paper proposals were substantiated for their solution, which can be applied both at the national and international levels. Thus, the recommendations formulated by us can contribute to the improvement of sustainability reporting in organizations around the world.

Modern Issues in Sustainability Reporting

373

"D"

•Organizaon “D” is a global vercally integrated company that accounts for about 1.4% of global oil producon and about 0.5% of proven hydrocarbon reserves. •1. Exploraon and producon: •1.1. Exploraon: Organizaon “D” is one of the leaders in terms of proved reserves of liquid hydrocarbons and proven reserves. The main part of the reserves belongs to the tradional category. Climac zones: from subarcc to equatorial. •1.2. Field development and producon of hydrocarbons: organizaon “D” develops reserves, including in major oil and gas provinces in Russia, Uzbekistan and Iraq, producing liquid hydrocarbons (oil and gas condensate), natural gas and associated petroleum gas; leadership in the development of complex reserves in Russia; the share of hydrocarbon producon in internaonal projects in the total hydrocarbon producon is about 15%; projects offshore (from 0.3 to 3,000 m) and on land. •2. Energy: The energy sector is represented by a complete chain – from generaon to transmission and sale of heat and electricity for external consumers. 4 HPPs, 3 SPPs, 1 WPP. •3. Processing: Organizaon “D” factories produce products that are used to fuel various modes of transport, as well as raw materials for other industries. 3.1. Oil refining: 4 refineries in Russia and 4 in Europe; products: motor fuel, oils and bitumen, bunker fuel and jet fuel. 3.2. Gas processing: 4 gas processing plants and 2 producon plants in Russia; liquid hydrocarbons and commercial gas. 3.3. Petrochemicals: 2 petrochemical producon facilies in Russia and 2 sites at refineries in European countries; products of pyrolysis and organic synthesis, fuel fracons and polymeric materials. •4. Trading and distribuon: Organizaon “D” is a major trader in crude oil and commercial gas, and a supplier of high quality fuel products and lubricants. Internaonal trading: wholesale sales of own oil and oil products, trade in purchased hydrocarbons; producon and sale of oils: > 800 types of oils; retail sales: a network of gas staons in 23 countries of the world; sea and river bunkering; air refueling

"E"

•1. Assets: •1.1. Financial and economic: capital investments: RUB 1,494.2 billion. •1.2. Personnel and intellectual: number of employees of the Group: 477.6 thousand; average monthly salary: RUB 105.1 thousand; labor costs: RUB 807.8 billion; social spending: RUB 40.7 billion (-9.8%); insured under VHI programs: 555.4 thousand people; number of flagship universies: 13; investment in R&D: RUB 21.4 billion; share of investment in R&D in revenue: 0.33%. •1.3. Social and reputaonal: expenses of organizaon “E” for charity: RUB 28.8 billion; volume of investments allocated by organizaon “E” for the gasificaon of Russian regions: RUB 56.0 billion; share of investments for gasificaon of Russian regions in revenue: 0.89%. •1.4. Environmental: total environmental protecon costs: RUB 49.1 billion; share of total environmental protecon costs in revenue: 0.78%. •2. Created value: •2.1. Financial and economic: market capitalizaon as of December 31, 2020: RUB 5.0 trillion; dividends per one ordinary share of organizaon “E” for 2020: RUB 12.55; dividend payments to shareholders: RUB 71,377.4 billion; total tax payments (in Russia and abroad): RUB 2,368.6 billion. •2.2. Personnel and intellectual: Group employees covered by collecve agreements: 72.7%; labor producvity: RUB 65.26 thousand / man-hour; staff turnover: 4.4%; improved working condions: 8.3 thousand employees; number of employees trained: 406.1 thousand people; economic effect from the use of R&D results: RUB 73 11.2 billion. •2.3. Social and reputaonal: average level of gasificaon in Russia: 71.4%; the number of facilies put into operaon under the program “Organizaon “E” - for children”: 39; cooperaon agreements with Russian regions: 81. •2.4. Environmental: GHG emissions: 210.3 million tons of CO2-eq.; volume of waste generaon: 3,229.8 thousand tons; water consumpon level: 3,236.6 million cubic meters; number of power plants based on RES and SER: 2,573; volume of energy produced from RES and SER: 13.3 million MWh

Fig. 2 Examples of differences in the items of the “Business Model” section in the SR of different organizations. Source: Developed and compiled by the authors

Table 2 The research of the quality of modern sustainability reporting

Questions we asked Is the information reflected in the sustainability reporting of modern organizations useful? Do you always fully understand the information in the sustainability reporting provided by organizations? Is it necessary, in your opinion, to improve the formation of sustainability reporting? Source: Developed and compiled by the authors

Respondents’ answers “Difficult to “Yes” “Not” answer” 51% 45% 4% 53% 38% 9% 74% 23% 3%

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References Al-Salam, G. T. A. M., Atta, A. A. K., Alalawi, T. G. Y., & Alaraji, F. A. A. S. (2020). The possibility of adopting the international financial reporting standard IFRS 6 for achieving transparency in the Iraqi oil industries. Journal of General Management, 21(179), 15–21. Al-Shaer, H., & Hussainey, K. (2022). Sustainability reporting beyond the business case and its impact on sustainability performance: UK evidence. Journal of Environmental Management, 311, article number 114883. Di Tullio, P., & La Torre, M. (2022). Sustainability reporting at a crossroads in Italian universities: Is web-based media adoption deinstitutionalising sustainability reporting? Administrative Sciences, 12(1), article number 34. Druzhilovskaya, T. Y., Druzhilovskaya, E. S., Korshunova, T. N., Denisova, I. P., & Denisov, P. V. (2020). Accounting policies for financial instruments of organizations in the modern conditions of the innovative economy. Lecture Notes in Networks and Systems, 129, 1588–1595. https://doi.org/10.1007/978-3-030-47945-9_169 Hasan, A., Hussainey, K., & Aly, D. (2022). Determinants of sustainability reporting decision: evidence from Pakistan. Journal of Sustainable Finance and Investment, 12(1), 214–237. Kulikova, L. I., Druzhilovskaya, T. U., & Druzhilovskaya, E. S. (2018). Challenges of the practical application of International Accounting Standard on property, plant and equipment by Russian companies.

T. Y. Druzhilovskaya et al. Journal of Engineering and Applied Sciences, 13, 569–574. https:// doi.org/10.3923/jeasci.2018.569.574 Kulikova, L. I., Gubaidullina, A. R., Mukhametzyanov, R. Z., Druzhilovskaya, T. U., & Druzhilovskaya, E. S. (2020). International financial reporting standard (IFRS) regulations for supply chain management. International Journal of Supply Chain Management, 9(4), 570–575. Kumar, K., Kumari, R., & Kumar, R. (2021). The state of corporate sustainability reporting in India: Evidence from environmentally sensitive industries. Business and Society Review, 126(4), 513–538. Mani, M. (2022). Sustainability practices and reporting: A comparative analysis of top ten Indian banks. Sustainability and Climate Change, 15(1), 68–80. Rashed, A. H., Rashdan, S. A., & Ali-Mohamed, A. Y. (2022). Towards effective environmental sustainability reporting in the large industrial sector of Bahrain. Sustainability (Switzerland), 14(1), article number 219. Toth, A., Suta, A., & Szauter, F. (2022). Interrelation between the climate-related sustainability and the financial reporting disclosures of the European automotive industry. Clean Technologies and Environmental Policy, 24(1), 437–445. Zieba, M., & Johansson, E. (2022). Sustainability reporting in the airline industry: Current literature and future research avenues. Transportation Research Part D: Transport and Environment, 102, article number 103133.

Assessment of the Strain-Stress Distribution in the Vicinity Conceding Mountainside’s Scarp Using Mathematical Modeling Jamila A. Baialieva , Kulnara J. Ismailova , Kalysbek K. Abdygaziev, Ainura K. Zhamangapova , and Ainura T. Dyikanova

Abstract

JEL Codes

This paper investigates the strain-stress distribution in the vicinity conceding mountainside, in which the interface zones between the scarps and the mountainside, the height of the scarp, and the effect of bulk and surface loads were considered in a single analytical model. When evaluating the strain-stress distribution near the scarp, the position and linear dimensions of the mountainside’s scarp were realized by mapping such a semi-infinite area, for which the Kolosov-Muskhelishvili functions were defined as general solutions for calculating stresses from the loads set at the scarp. Quantitative and qualitative regularities of stress distribution in the vicinity of a one-sided or two-sided mountainside in the variation of the combination of forces action are obtained, which are considered in the constructed analytical solutions. The analysis of the stress distribution revealed the following. In the interface zone with the ridge crest, the horizontal component of stress has the highest concentration, which is 1.7 times higher than the vertical component due to gravity and horizontal tectonic compression. The general law of distribution of vertical stresses corresponds to the change in the shape of the mountainside; the quantitative values are somewhat less than the value of sliding stresses. The maximum values of tangential stresses are observed in the interface zone of the mountainside and scarp; the distribution pattern of stresses σx and σ2 is almost the same.

C6 · C9

Keywords

Mountainside · Strain-stress distribution · Massifs · Distribution of stress fields · Displaying function · Mathematical model J. A. Baialieva · K. J. Ismailova (✉) · K. K. Abdygaziev · A. K. Zhamangapova · A. T. Dyikanova Kyrgyz National Agrarian University named after K. I. Skryabin, Bishkek, Kyrgyzstan

1

Introduction

Scarps are formed by nature or created by man (i.e., humanmade), which conjugate to the mountainside at different angles of inclination and at different heights. To ensure the stability and preserve structures located in the side zone from landslides, it is necessary to carefully study the strain-stress state of the massifs when the scarps and the adjacent mountainsides work as a single unit. It is also necessary to create such an analytical model and program for calculating the strain-stress distribution of the mountainside’s scarp, in which it is possible to distribute the load originating from the weight of loaded transport, transmission line supports, and the weight of buildings and structures. The studied patterns of stress distribution and their concentration zones allow us to use them to predict the possible zones of the destruction of mountainsides when conducting engineering activities to strengthen the grade of a highway and expert assessment of the strength and stability of the bases of structures and communications of transmission points located on mountainsides.

2

Methodology

In mountain areas, the strain-stress distribution of mountainsides is studied to support various human economic activities. The condition of mountainsides, used at least for road bases in mountain regions, is studied insufficiently. For this problem, the traditionally applied methods for estimation of the strain-stress distribution of mountainsides, such as the unloading method, the finite element (FEM) (Dolezalova, 1968; Goldin & Troitsky, 1971; Kurlenya & Popov, 1983; Usmanov, 2009; Yerzhanov & Kerimbaev, 1975), the finite

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_65

375

376

J. A. Baialieva et al.

difference method (FDM) (Leeman, 1968; Nikitin, 1959), analytical, and other methods, have not found wide application due to some technical difficulties. The unloading method (Aitmatov, 2011; Dolezalova, 1968; Hast, 1969; Kutepov, 1966; Mambetov, 1988; Muskhelishvili, 1976) can be carried out in the presence of underground workings in the area where the scarp and the mountainside meet. A computational model is created when using FEM and FDM for the mountainside’s scarp area. In this model, one side (the day surface of the scarp) is modeled precisely, and in the other three sides of the computational model (two side surfaces and one horizontal side), the boundary conditions are set approximately according to the subjective perception of the researcher. In this case, we consider the application of new technology of conformal mapping (Goldstein & Kalinin, 1969; Kurdin, 1971) to simulate the mutual influence of the scarp with the mountainside, as well as the creation of an analytical model of the massif in the area of the mountainside’s scarp (Bayalieva & Zhumabaev, 2016; Muskhelishvili, 1976; Ter-Martirosyan & Akhpatelov, 1976) that considers the joint or separate action of surface distributed loads, gravity, and tectonic compression and the method of calculation of the strain-stress distribution of the mountainside’s scarp using the MATHCAD software package (Kiryanov, 2007). Patterns of distribution of stress and strain fields in the vicinity of the scarp of the mountainside are also established. The mathematical model of the mountain relief is modeled with a mapping function, as in the works of B. Zhumabaev and K. Dzh. Ismailova (Ismailova & Zhumabaev, 2009; Zhumabaev, 1988; Zhumabaev & Ismailova, 2005), N. S. Kurdin (1971), and Zh. A. Bayalieva (Bayalieva, 2013; Bayalieva & Zhumabaev, 2008, 2015, 2016; Zhumabaev & Bayalieva, 2015): m

z = wðϚÞ = αϚ þ k=1

αk Ϛ þ t 0k - i

a1 t t2 þ 1

y1 ðt Þ =

a1 a t y ðt Þ = 2 2 t þ1 t2 þ 1 2

This research considers the case where (tok - tok-1) ≤ ak in Formula (1). This method of constructing a mapping function as a sum of simple fractional functions (Bayalieva, 2016; Kurdin, 1971; Zhumabaev, 1988) was proposed by N. S. Kurdin (1971), and B. Zhumabaaev (1988). Modeling methods and analytical descriptions of stresses and deformations of scarps are described in the work of Zh. A. Bayalieva (Bayalieva, 2016; Bayalieva & Zhumabaev, 2016). The relationships found for the complex potentials Ф(ζ) and Ψ(ζ) are used to determine, insatiate, and lgorithmize the stress components in the mapping function (1) in MATHCAD symbols (Kiryanov, 2007). These ratios are as follows: ФðϚÞ  ω‘ ðϚÞ þ GðϚÞ = AðϚÞ ψ ðϚÞ  ω‘ ðϚÞ þ ωðϚÞ þ Ф‘ ðϚÞ  ω‘ ðϚÞ - GðϚÞ = BðϚÞ

ð1Þ

where m—the number of bends within the half-plane y ≤ 0; α and tok—real constants, k—complex constants. Performing a detailed analysis of the parametric equations of the contour lines x(t) и y(t), B. Zh. Zhumabaev (1988) established that at ζ= t, η = 0, it follows that: xðt Þ = at þ

1. The parameters were chosen so that the value of α for two neighboring values was five or more times higher than ak, resulting in the interaction of two neighboring protrusions. 2. If tok = 0, then all summands are summed as a1—one constant—and there is only one summand instead of the sum in Formula (1). 3. If (tok - tok-1) > 5, then, in the vicinity of each scarp, the ordinates are described by a parametric equation of the type ak with the same law of change of the abscissa x(tk) for all terms of the sum in Formula (1).

AðϚÞ = -

1 2πt

BðϚÞ = -

1 2πt

ð3Þ

1

ðN þ iT Þω‘ ðt Þ dt t-Ϛ -1 1

ðN - iT Þω‘ ðt Þ dt t-Ϛ -1

ð4Þ

Using function (1), having selected values t0k (k = 1, 2, . . . n), and using this method, we can simulate the presence of m edges on the scarp (Bayalieva & Zhumabaev, 2015). Parametric equations of the scarp’s contour with values should be defined for signs Re [ω (ξ, 0)] and Im [ω (ξ, 0)] at z = ω (t, 0), where the real part is the parametric equation x(t), the imaginary part of which is y(t).

ð2Þ

In the early works of scientists (Kurdin, 1971; Zhumabaev, 1988) investigating the strain-stress distribution of rock massifs, the following three circumstances were considered:

3

Results

The stress state in the vicinity of the mountain is simulated by constructing the stress fields σx, σy, τxy, which arise from the combined action of gravitational, uniform-seismic forces and

Assessment of the Strain-Stress Distribution in the Vicinity Conceding Mountainside&r##

horizontal tectonic compression, as well as surface forces that are applied in the final section of the scarp. The strain-stress distribution model is defined as the sum of the four stresses:

377

We express the integrals (4) from the boundary conditions (7) through AG(ζ) and BG(ζ) (Bayalieva et al., 2018): n

σ x = σ xπ þ σ xr þ σ xT þ σ xN σ y = σ yπ þ σ yr þ σ yT þ σ yN π r T N τxy = τxy þ στxy þ τxy þ στxy

T3

ð5Þ

where σ πx , σ πy , τπxy —the complex stresses for the half-plane that can be written in the following form:

AGðϚÞ =

a j=1 j

σ πx = λ  py  y  T x ,

T4 BGðϚÞ =

σ πy = py  y, τπxy = px  y,

ð6Þ

where px = Kcγ, sinδ is the horizontal part and y = γ(1 Kccosδ is the vertical part of the volumetric force. The components given in Formula (6), when summed with the stress components σ rx , σ ry , τrxy , give a stress state, which is called the initial stress state (Fig. 1). In this case, the integrals A (ζ) and B (ζ) in Formula (4) are calculated from imaginary loads N and T, which have the following form (Muskhelishvili, 1976): π σ xπ þ σ yπ σ xy - σ xπ þ 2iτπ xy 2ia N þ iT = e 2 π 2 π π π π σ xy - σ x - 2iτ xy - 2ia σx þ σy e N - iT = 2 2

ð7Þ

þ

ak 

ðϚ þ t ok - iÞ

n

þ

k=1

a j=1 j

ðϚ þ t ok - iÞ2

a - T 1j ðA3 þ iA2 Þ T 3 T 2j þ 2 Ϛ þ t oj - i Ϛ þ t oj - i

2

,

n r=k=1

ak

ðϚ þ t ok - iÞ

n

n j = 1 aj



n j = 1 aj

Ϛ þ t oj - i

2

a - T 1j ðA3 þ iA2 Þ T 3 T 2j þ 2 Ϛ þ t oj - i Ϛ þ t oj - i

2

; ð8Þ

The total stress fields obtained from integrals (5) satisfy the conditions T (ξ) = 0 and N (ξ) = 0 in the mountainside contour. Horizontal tectonic forces Tx, leading to the stress distribution, satisfy the following boundary conditions: N n þ iT n =

Tx T 1 - e2ia , N n - iT n = - x 1 - e - 2ia , 2 2 ð9Þ

The values of integrals A(ζ) and B(ζ) at point (4), calculated from the boundary conditions (9), are denoted as AT(ζ) and BT(ζ) and represented in the following form:

Fig. 1 Strain-stress distribution on a two-sided scarp under the action of gravity. Source: Developed by the authors using the compiled algorithm and the capabilities of the MATHCAD software system

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J. A. Baialieva et al. n

AT ðϚÞ = T 1 

j=1

A similar problem was solved, where (Table 1) the values of all stress components are given for the contour points when the load N = -50 MPa is applied on the top scarp (Fig. 2).

aj

Ϛ þ t oj - i

2

, BT ðϚÞ = - T 1

n



j=1

aj

Ϛ þ t oj - i

2

, T1 =

T1 2

ð10Þ

The results of these calculations are given for the area of the mountainside conjugation and their quantitative values in relation to the height of the mountainside H. An example would be its deformed position (Bayalieva & Zhumabaev, 2016). The height of the mountainside H = 1000 m. The vertical forces N vary over a wide range. If there is a traffic lane on the scarp, the value of the weight of the loaded car or wagon train is N. When calculating the deformation at the edges of the scarp, we set the conditional values of the loads. The following parameters are adopted: Young’s modulus E = 2.2 ∙ 104 MPa; Poisson’s ratio μ = 0.3; lateral expansion of rocks λ = 0.4; tectonic compression Tx = -50 MPa; vertical external load N = -200 MPa. Hooke’s law is used in the following form: 2  ð 1 þ vÞ 1  τxy ðx, yÞεðx, yÞ = 2:2  104 2:2  104  σ x ðx, yÞ - v  σ y ðx, yÞ ,

γ xy ðx, yÞ =

εy ðx, yÞ =

1 σ y ðx, yÞ - v  σ x ðx, yÞ : 2:2  104

4

Conclusion

This paper considers a mathematical method for modeling a polyhedral scarp consisting of a mapping function and a derivative relation for two Kolosov-Muskhelishvili functions calculated for two integrals of boundary conditions. The developed analytical model is used to create the distribution of stresses and strains under the action of forces on the massif (gravitational, inertial, and surface distributions). The analysis of the stress distribution reveals the following: • The horizontal component has the greatest concentration in the zone of conjugation with the ridge wall, which exceeds the effect of gravity and horizontal tectonic compression by a factor of 1.7; • The law of distribution of vertical stresses corresponds to the change in the shape of the mountainside; the numerical values are slightly lower than the values of stresses; • The maximum values of tangential stresses reach the conjugate zone of the mountainside and wall, the stress distribution graphs σx and σ2 practically coincide, and the same stress is observed between σc and the wall. Deformation of the two-sided mountainside under the action of gravity indicates stretching in the vertical direction in the vertical part and compression in the area of the ridge base.

Table 1 Stress values on the contour near the scarp 0

ξ

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

2.476 2.485 2.489 2.515 2.511 2.57 2.576 2.548 2.537 2.564 2.605 2.614 2.581 2.583 2.594 22.598 2.65

x 57.048 59 59.768 62.42 63.79 66.83 67.49 68.58 72.43 72.82 75.48 76.15 76.84 78.55 81.13 83.47 85.06

y 587.46 582.14 581.22 582.47 586.34 586.27 586.13 586.42 586.27 586.36 586.48 586.25 586.19 586.43 586.28 586.18 586.27

σ1 0.382 0.394 0.456 -50.51 -50.45 -50.55 -50.34 -50.41 -50.24 -50.30 -50.13 -50.15 -50.19 -50.09 -50.03 -50.89 1.259

σ2 102∙10-13 89∙10-14 96∙10-13 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 85∙10-12

N 09∙10-13 62∙10-14 92∙10-13 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 -52 88∙10-12

Source: Developed by the authors using the compiled algorithm and the capabilities of the MATHCAD software system

T 52∙10-13 78∙10-14 09∙10-13 45∙10-13 2.5∙10-13 14∙10-13 05∙10-15 95∙10-13 39∙10-14 48∙10-14 08∙10-14 06∙10-14 43∙10-14 3.5∙10-14 06∙10-14 64∙10-13 55∙10-13

τmax 0.12 0.106 0.113 0.347 0.349 0.587 0.249 0.325 0.328 0.252 0.376 0.402 0.43 0.459 0.49 0.523 0.558

Assessment of the Strain-Stress Distribution in the Vicinity Conceding Mountainside&r##

379

Fig. 2 Mountainside under the action of surface loads. Source: Developed by the authors using the compiled algorithm and the capabilities of the MATHCAD software system

Vertical relative deformations are everywhere under the action of tectonic forces, except for horizontal deformations. This method of determining and calculating the strain-stress distribution is much more economical and efficient than other methods.

References Aitmatov, I. T. (2011). On the natural fields of residual stresses in rocks of igneous and metomorphic genesis. Current Problems of Continuum Mechanics, 13, 28–55. Bayalieva, Z. A. (2013). Distribution of stresses near a mountain slope ledge from the combined effect of load distribution and tectonic compression. Science and New Technologies, 5, 48–54. Bayalieva, Zh. A. (2016). Mathematical modeling of the strain-stress distribution in the vicinity conceding mountainside (Synopsis of Dissertation of Candidate of Technical Sciences). : Institute of Geomechanics and Mineral Development of the National Academy of Sciences of the Kyrgyz Republic. Bayalieva, Z. A., & Zhumabaev, B. Z. (2008). Methodology for calculating the strain-stress distribution of massifs at the base of roads located in the mountainside. Izvestia KSTU named after I. Razzakov, 14, 206–210. Bayalieva, Z. A., & Zhumabaev, B. Z. (2015). Stress state of massifs near a scarp on a mountain slope under the combined action of gravity and seismic forces. Natural and Technical Sciences, 12(90), 53–61. Bayalieva, Z. A., & Zhumabaev, B. Z. (2016). Methods of modeling and analytical description of the stress strain state of mountain slope with steps. Bulletin of Transbaikal State University, 22(1), 4–16. Bayalieva, Z. A., Botokanova, B. A., & Zhumabaev, B. Z. (2018). Mathematical modelling of the intense and deformed state around the pressure head tunnel, located in the zone of the intermountain depression. Bulletin of Transbaikal State University, 24(7), 4–17. https://doi.org/10.21209/2227-9245-2018-24-7-4-17 Dolezalova, N. (1968). Influence of gorge slope steepness on fracture formation in clay cores of stone and earth dams (Synopsis of Dissertation of Candidate of Technical Sciences). Research and Engineering Institute for Water Supply, Sewage Systems, Hydraulic Engineering Structures and Engineering Hydrogeology.

Goldin, A. L., & Troitsky, A. P. (1971). Using the finite element method to calculate the strain-stress state of a triangular canyon. Proceeding of the VNIIG, 95, 98–121. Goldstein, R. V., & Kalinin, R. V. (1969). Experience of applying the analytical method to assess the stress state of rock massif in the sides and base of deep river valleys. Moscow University Bulletin. Series 4. Geology, 5, 54–65. Hast, N. (1969). The state of stresses in the upper part of the Earth’s crust. Tectonophysis, 8(3), 109–211. Ismailova, K. D., & Zhumabaev, B. Z. (2009). Stress distribution in the body of hill dams under the action of gravitational forces. Bulletin of the Kyrgyz National Agrarian University, 1(12), 473–478. Kiryanov, D. V. (2007). MATCAD 14. BHV-Petersburg. Kurdin, N. S. (1971). On the construction of conformal mappings. In L. V. Ershov & V. N. Teliyants (Eds.), Issues in rock mechanics (pp. 35–59). Nedra. Kurlenya, M. V., & Popov, S. N. (1983). Theoretical basis for determining stresses in rocks. Nauka. Kutepov, V. M. (1966). Results of studies of natural stresses in fractured rock massifs of mountainsides. Moscow University Bulletin. Series 4. Geology, 6, 71–76. Leeman, E. R. (1968). The determination of the complete state of stress in Vock in a single borehole – Labovatoru und underground measuvemente. International Journal of Rock Mechanics and Mining Sciences & Geomechanics Abstracts, 5(1), 31–38. https:// doi.org/10.1016/0148-9062(68)90021-1 Mambetov, S. A. (1988). Forecasting and control of the strain-stress distribution of rock massifs in high mountainous areas. Ilim. Muskhelishvili, N. I. (1976). Some basic problems of the mathematical theory of elasticity. Nauka. Nikitin, S. N. (1959). Stress distribution in the sides. Scientific Papers of the High School. Mining, 2, 75–79. Ter-Martirosyan, Z. G., & Akhpatelov, D. M. (1976). Stress state of mountain massifs in the gravity field. Reports of Academy of Sciences of the Soviet Union, 220(2), 311–314. Usmanov, S. F. (2009). Methodology for assessing the stability of the sides, considering the seismicity of the region. Bulletin of Kyrgyz Russian Slavic University named after First President of Russia B.N. Yeltsin, 9(5), 180–185. Yerzhanov, J. S., & Kerimbaev, J. S. (1975). Finite element method in rock mechanics problems. Nauka. Zhumabaev, B. Z. (1988). Stress distribution in rock massifs with mountainous topography. Ilim.

380 Zhumabaev, B. Z., & Bayalieva, Z. A. (2015). Strain state of rock mass in the vicinity conceding mountainside. Bulletin of Kyrgyz Russian Slavic University named after First President of Russia B.N. Yeltsin, 15(9), 168–172.

J. A. Baialieva et al. Zhumabaev, B. Z., & Ismailova, K. D. (2005). Assessment of geomechanical condition of the reservoir dam. Bulletin of Kyrgyz Russian Slavic University named after First President of Russia B.N. Yeltsin, 5(3), 88–91.

Marketing Mix of a Responsible Company to Manage the Risks to the Achievement of the SDGs Alexey V. Tolmachev , Aleksandr Kh. Shigapov and Marina N. Kiseleva

, Aleksandr A. Krutilin,

Abstract

Keywords

In this paper, we strive toward identifying the main directions of the formation of the marketing mix of responsible companies to manage the risks of implementing the SDGs on the example of countries that demonstrate sustainable development. We use the scientific & practical and analytical sources of information and the methods of complex analysis, systems approach, and method of adaptation. The scientific novelty of this research is due to the further development of the theoretical and practical complex of the marketing mix, which is important for the modern responsible companies that are aimed at managing the risks to the SDGs. We analyse the positive experience of responsible enterprises in the sphere of management of the risks to the SDGs. We consider the characteristics of the marketing tools of these companies in the context of the effectiveness of their impact on the sustainability of development of countries and the companies’ productiveness, as well as the influence on consumers and partners (suppliers). We discover certain complexities of implementing the elements of the marketing mix of these companies under the conditions of the influence of the global crisis (the pandemic and the period of dealing with its consequences), which is connected with the destruction of logistics ties at the international level.

Risks to the SDGs · Responsible companies · Marketing mix · Responsible consumption and production · Sustainable development of cities

A. V. Tolmachev (✉) Kuban State Agrarian University named after I.T. Trubilin, Krasnodar, Russia A. K. Shigapov Vyatka State University, Kirov, Russia e-mail: [email protected] A. A. Krutilin · M. N. Kiseleva Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia

JEL Codes

М14 · М31 · О35 · Q01 · Q56 · Q57

1

Introduction

The influence of the modern tendencies of globalism makes companies change their business strategies in favour of marketing that is oriented not only toward the achievement of its goals but also at the implementation of contribution to the management of risks of the UN SDGs. Such practice influences primarily the increase in competition, which makes companies search for new tools for the creation of competitive advantages related to the growth of the role of social and environmental responsibility. Development of marketing policy and the choice of the marketing mix are formed under the impact of such phenomena as the growing social injustice and degradation of eco-system, which make to limitation of access to certain resources and require from response companies the search for new solutions in promoting their products (services). Apart from the focus on general conceptual goals of the country’s development, companies should look toward such driving force of the market as the loyalty of consumers. The latter become more active participants of the ethical consumer movement, making pressure on companies and moving them toward the formation of marketing strategies based on their preferences. Thus, the concept of sustainable development sets new tasks before marketing. These challenges are connected with

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_66

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the influence on future generations, social aspects, needs and expectations of society. Responsible marketing is closely connected with the concept of sustainable development and, in this context, at the micro and macro level, influences the management of risks. The purpose of this research is to identify the main directions of the formation of the marketing mix of responsible companies to manage the risks of implementing the SDGs by the example of countries that demonstrate sustainable development. For this, we solve the following tasks: characterising the experience of formation of a marketing mix of responsible companies to manage the risks of implementing the SDGs; systematising the key directions of the influence of marketing policy on the minimisation of risks in the sphere of national sustainable development.

2

Materials and Methods

In this research, we study the characteristics and directions of using marketing in overcoming the risks to the SDGs based on the analysis of the scientific and practical works on this problem, namely in the context of the analysis of (Castello & Reddy, 2020; Cooke, 2020; Handa, 2020; Javed & Jang, 2021; Sakyi, 2019; Wren, 2022). The above works dwell mainly on the impact of certain responsible companies on the sustainable development of countries. Thus, it is necessary to systematise the main directions of such impact and the topicality of the assessment of their adaptation. The implementation of the formulated tasks is based on the use of the corresponding method: the complex analysis is used to distinguish the main directions of the marketing mix of responsible companies on the management of risks to the SDGs; the method of system approach allows identifying the characteristics of the influence of companies on these risks; the method of adaptation is required for forecasting the use of experience of the leading companies of the world under the conditions of developing countries.

3

Results

Let us analyse the main characteristics of the formation of a marketing mix of responsible companies in the sphere of managing the risks to the achievement of the SDGs by the example of countries that demonstrate good sustainable development. It is possible to note the activities of the company 3M in the sphere of the marketing mix, connected with the promotion of its products in the global and national markets (USA) (Sakyi, 2019; Sheth & Parvatiyar, 2021). In 2019, this company introduced, as a part of its strategy, the focus on the

active implementation of sustainable development in production, logistics and sales. The key components of the company’s marketing mix are redesign and change of the structure of products, aimed at the refusal to use environmentally hazardous materials (resources), and the focus on renewable materials (resources); innovations in production, which ensure non-waste production that stimulated the reduction of pollution of the environment and preservation of human health; interaction with partners (suppliers, buyers) in the sphere of provision of the values of management of the risks to the SDGs in production, logistics and consumption. Among the products of 3M that imply the provision of environmental value, we can mention filters and accessories for water and air purification, which are manufactured of 100% recycled materials (reduction of risk to SDG 12); tiles for residential houses, which contains granules that decrease the level of smog and improve the quality of air (minimisation of risks to SDG 12 and SDG 3; disposable respirators that ensure filtering of polluted air and that are used for the sanitary and hygienic purposes (reduction of risk to SDG 3); insulating gases, used by electric energy companies, which do not create a greenhouse effect (reduction of risk to SDG 12), etc. (Sustainablebrands, 2022). Besides, the participation in the sustainable development of the company’s partners and customers is connected with the management of the risks to SDG 17. In this direction, 3М participated in the processes of adapting its products to the system of sustainable development of buyers and organising the logistics supply chains from suppliers. Since 2019, the company has been working with the focus on the promotion and sales of products of a new product line, oriented toward the responsible management of risks in the implementation of the above SDGs. Let us determine the effectiveness of functioning of this company over 2019–2021 (Fig. 1). The analysis of the results of the implementation of the marketing mix of 3М, oriented toward sustainable development, has shown that this environmentally responsible company was able to reach balance in managing its own and global (national) risks to the SDGs and ensured the growth of net income over 2019–2021 (from USD4.52 billion to USD5.92 billion). Similarly to 3M, Tesla (USA) is oriented toward the approaches in the creation and use of marketing mix that include the focus on the creation of product line envisaging responsible management of risks in the sphere of ecologisation. The main elements of Tesla’s marketing mix are declaring the use of eco-friendly materials in car production; innovative non-waste technologies of production; effective strategy of bonuses for personnel, which ensures high productiveness and support for the focus on the implementation of the SDGs (Cooke, 2020; Handa, 2020). Over 2014–2019, Tesla implemented innovations in the

Marketing Mix of a Responsible Company to Manage the Risks to the Achievement of the. . . Fig. 1 Value of net income of 3М over 2019–2021. Source: Compiled by the authors based on (Statista, 2022b)

383

Net income, billion dollars US 8 6

5.45

4.52

5.92

4 2 0

2019

production processes, which increased prime cost and reduced profit. This did not stimulate the provision of sustainable development in the environmental and social spheres. Due to the optimisation of the innovative policy and its adaptation to the general strategy of sustainable development, the company demonstrated growth of net income in 2020–2021 (Fig. 2). Assessment of the results (Fig. 2) shows that the company had losses of USD 775 million in 2019, while net income in 2020 and 2021 equalled USD862 million and USD5644 million, accordingly. Thus, Tesla and 3M were able to ensure optimisation and balance of the strategic management of the marketing mix, which influence the stabilisation of development in the context of management of the risks to the SDGs within all components (environmental, social and economic). Responsible and sustainable marketing development of the American companies 3М and Tesla ensures a positive impact on the management of risks to the UN SDGs in the USA and countries where the companies perform their activities (production, logistics, product sales). In 2019, the USA was ranked 35th in the international ranking of sustainable development, in 2020—41st, and 2021—32nd (Cambridge University Press, 2022). Let us elaborate on the experience of the marketing mix in managing the risks to the SDGs (environmental and social components) of a responsible company H&M (Sweden) (Javed & Jang, 2021; Wren, 2022). The company focuses on such element of the marketing mix as the use of eco-friendly materials in its production. This approach has been used in the company for quite a long time (since the transition of Swedish and European companies to the adoption of social and environmental responsibility in the sphere of management of the risks to the SDGs. Also, another Fig. 2 Value of net income of Tesla over 2019–2021. Source: Compiled by the authors based on (Statista, 2022d)

2020

2021

element is declaring the necessity for responsible consumption by buyers. This facilitates the attraction of buyers who are oriented toward this direction. The most effective marketing measures in the sphere of sustainable development that influenced demand were the emphasis on responsible consumption of customers due to the purchase of the line of clothing, the part of revenues from which was spent for the construction of safe buildings in Bangladesh (SDG 11) and well-being of animals (SDG 15). These measures attracted the attention of consumers who are loyal to eco-oriented consumption. The analysis has shown that the company’s marketing mix provided H&M with the following indicators of development effectiveness: in 2019, its operating profit equalled USD1813.92 million, in 2020—USD334.04 million (COVID-19 pandemic) and 2021—USD1777.66 million (Statista, 2022c). Despite a certain decrease in the operating profit in 2020, due to the pandemic and its consequences, the year 2021 saw its growth, which reached the 2019 level. This is a sign of the effectiveness of the selected marketing tools, which are connected with the environmental and social responsibility of the studied company. Responsible development of H&M in the direction of the management of the risks to the SDGs contributes to Sweden’s GDP and the country’s high ranking in the sphere of managing sustainable development risks (second position in 2019, third position in 2020 and second position in 2021) (Cambridge University Press, 2022). It’s also worth noting the policy of formation of marketing mix observed in the companies Levi Strauss & Co. (USA) and Mud Jeans (Netherlands). According to the analysis of the materials for implementing marketing tools, these companies selected similar strategic benchmarks of

Net income, million dollars US

5644

6000 4000

862

2000

0 2019 -2000

2020 -775

2021

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responsible development in the sphere of management of the risks to the SDGs (Castello & Reddy, 2020). These companies’ elements of marketing mix include the orientation toward the change of marketing management (change of the product structure, labels, packaging, approaches to advertising, tools of promotion, order of utilisation and use of products); use of eco-friendly materials in production; focus on the importance of the responsible use of products by buyers. The first component was implemented by the companies as the need to implement a wide range of changes in the sphere of production (new technological lines that allow working with new materials (recycled materials (Levi Strauss & Co. and Mud Jeans)), hemp fibre (Levi Strauss & Co.), special paint for cloth that does not contain active chemical products); advertising and information provision; promotion and positioning of clothing that requires new approaches to the use (washing, storing, utilisation). The top-priority element of the marketing mix of both companies is the focus on reorientation of marketing management, which is declared to consumers as the set of the fight against the risks to SDG 12. These companies facilitate the innovative development of industrial potential within the light industry (managing the risks to SDG 9). The chosen marketing mix was effective for the activities of Levi Strauss & Co. in 2019 and 2021 (net income equalled USD394.98 million and 553.54 million, accordingly), but did not allow ensuring profitability in 2020 (the losses equalled USD127.14 million)—due to the failures in logistics chains because of the pandemic (Statista, 2022a). In 2021, this responsible enterprise was able to deal with difficulties in the sphere of logistics, and the marketing policy gave an impulse to development in the main sectors. Similarly to Levi Strauss & Co., Mud Jeans in 2019–2021 ensured the continuous functioning in all countries of its operation, facilitating the management of the risks to the SDGs in the Netherlands (resident country). In 2019, the Netherlands was ranked 9th in the world ranking of sustainable development, in 2020—17th, and 2021—11th (Cambridge University Press, 2022). The Netherlands, like many other countries in 2020, demonstrated a decrease in the level of sustainable development, which was caused by the impact of the global crisis and the pandemic, as well as the fight against its consequences.

4

Discussion

Based on the analysis of the scientific & practical and analytical materials, we can present a systematisation of the main directions of influence of the marketing mix of responsible

companies on the minimisation of risks in the sphere of sustainable development, which includes the following: 1) Element of redesign and change of product structure, connected with ecologisation and use of renewable sources in production. This direction may attract the attention of consumers who are aimed at making their contribution to environmental development. That’s why implementation and declaration of such an approach allows companies that are world leaders in the sphere of management of the risks to the SDGs by ecologisation and human development to ensure market competition and achieve financial and economic results. 2) Element of production innovations, which influence the implementation of non-waste production, which facilitates the reduction of pollution and preservation of human health. This direction is implemented under the conditions of companies’ orientation toward the use of recycled materials in production. Such organisation of technological processes cannot be always applied under the conditions of the traditional approach, which envisages the focus on new materials (resources). Accordingly, implementation of such a measure is possible in the case of substantial investments in development. 3) Element of the interaction of responsible companies and partners (suppliers, buyers) in the context of support for the organisation of the management of risks to the SDGs. This leads to the creation of a sustainable partnership, which is oriented toward similar goals in the sphere of energy efficiency, ecologisation, responsible production and consumption. The use of this benchmark impacts the globalisation of partnerships for the fight against world crises and challenges in the climate sphere, sphere of human development, etc. 4) Element of stimulation (bonuses) of personnel of the studied companies, which influences the growth of efficiency and support for the focus on achieving the SDGs. This direction is used in companies that focus on the maximum possible involvement of human resources in their development and the achievement of the SDGs. Such an approach requires from companies additional efforts on training and acquaintance of personnel with all possibilities and ways of growth of labour efficiency. 5) Element of declaration of the necessity for responsible consumption from buyers. This direction implies the attraction of new categories of consumers and growth of loyalty from the existing consumers, which eventually influences the growth of market competition and financial and economic indicators. 6) Element of focus on reorientation of marketing management. This direction allows for transformations of the

Marketing Mix of a Responsible Company to Manage the Risks to the Achievement of the. . .

marketing sphere together with the transformation of the entire system of strategic management. The connection between this element and the management of risks to the SDGs lies in the fact that in the case of the focus on their minimisation, a responsible company changes the entire complex of marketing, with the mandatory observation of balance between sustainable development and achievement of its goals.

5

Conclusion

In this research, we revealed the characteristics and directions of the marketing mix of responsible companies, aimed at minimisation of risks to the SDGs. The revealed characteristics demonstrated that companies that are leaders in the sphere of sustainable development are focused on certain SDGs, in particular, SDG 12 (Responsible consumption and production), SDG 9 (Industry, innovation and infrastructure), SDG 3 (Good health and well-being), SDG 11 (Sustainable cities and communities), SDG 15 (Life on land) and SDG 17 (Partnerships for the goals). The performed analysis allows determining the dependence between the development of achievements of responsible companies and improvement of the management of the risks to the SDGs in countries of the companies’ residence and countries in which companies implement the production and sales of their products. The formulated system of the marketing mix, aimed at managing the risks to the SDGs, can be adapted by responsible companies in developing countries. However, this will require consideration of all economic, technical, and social features of implementation at the level of companies and countries. A special role here belongs to the possibility of precise business planning of the balance of a company’s internal interests and parameters of the management of the SDGs.

385

References Cambridge University Press. (2022). Sustainable development report. Accessed July 14, 2022, from https://dashboards.sdgindex.org/ rankings Castello, M., & Reddy, S. (2020). Sustainability efforts of denim brands Mud Jeans and Levi Strauss & Co. Sustainability in Fashion Proceedings. Accessed July 13, 2022, from https://www. researchgate.net/publication/342753556_Sustainability_efforts_of_ denim_brands_Mud_Jeans_and_Levi_Strauss_Co. Cooke, P. (2020). Gigafactory logistics in space and time: Tesla’s fourth gigafactory and its rivals. Sustainability, 12, 2044. Accessed July 13, 2022, from https://www.mdpi.com/2071-1050/12/5/2044#cite Handa, B. (2020). Constant rise of Tesla Inc.: Strategic marketing plan leading to company’s colossal growth in 2020. ENVISION–International Journal of Commerce and Management, 14, 45–49. Javed, T., & Jang, J. (2021). The sustainability claims’ impact on the consumer’s green perception and behavioral intention: A case study of H&M. Advances in Management & Applied Economics, 10(2), 1–22. Sakyi, K. A. (2019). Global operations innovativeness and entrepreneurship at 3M Company Limited. Advances in Social Sciences Research Journal, 6(7), 627–632. Sheth, J. N., & Parvatiyar, A. (2021). Sustainable marketing: Marketdriving, not market-driven. Journal of Macromarketing, 41(1), 150–165. Statista. (2022a). Net income of Levi Strauss worldwide from 2005 to 2021. Accessed July 13, 2022, from https://www.statista.com/ statistics/268546/net-income-of-levi-strauss-worldwide/ Statista. (2022b). Net income of 3M worldwide from 2010 to 2021. Accessed July 13, 2022, from https://www.statista.com/statistics/ 733577/net-income-of-3m/ Statista. (2022c). Operating profit of the H&M Group worldwide from 2009 to 2021. Accessed July 13, 2022, from https://www.statista. com/statistics/252191/profit-of-the-h-und-m-group-worldwide/ Statista. (2022d). Tesla’s net income/loss from FY 2014 to FY 2021. Accessed July 13, 2022, from https://www.statista.com/statistics/ 272130/net-loss-of-tesla/ Sustainablebrands. (2022). All new 3M products to include sustainability value. Accessed July 13, 2022, from https:// sustainablebrands.com/read/product-service-design-innovation/allnew-3m-products-to-include-sustainability-value Wren, B. (2022). Sustainable supply chain management in the fast fashion Industry: A comparative study of current efforts and best practices to address the climate crisis. Cleaner Logistics and Supply Chain, 4. Accessed July 13, 2022, from https://www.sciencedirect. com/science/article/pii/S2772390922000051

The Role of Personnel Training in Higher Education and HRM to Reduce the Sustainable Development Risks Konstantin V. Vodenko and Platon A. Lifanov

, Anna N. Liberovskaya, Elena N. Makarenko

,

Abstract

Keywords

The goal of this paper is to identify the main aspects of the impact of training of human resources in the sphere of higher education and HRM on the reduction of sustainable development risks. For this, the trend method, statistical analysis and the method of deduction are used. The novel approach of this research is due to the theoretical elaboration of the characteristics and the list of directions of the impact of higher education and the system of personnel management on the reduction of the level of sustainable development risks. In this paper, we consider the experience and directions of transformations in the sphere of higher education and HRM under the modern conditions of implementing strategies for the reduction of sustainable development risks. We substantiate the positive influence of the adaptation to the changes in the external environment of the given spheres on the state of sustainable development of institutions (companies) of the selected countries. The distinguished aspects of the functioning of universities, business schools and companies within the creation of effective training and personnel management demonstrated that they move these systems toward the conceptual basics of the sustainable development of all spheres.

Sustainable development risks · Universities · HRM · Higher education · Labour · Sustainable Development Goals

K. V. Vodenko (✉) Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia A. N. Liberovskaya Sebryakovskiy Branch of Volgograd State Technical University, Mikhailovka, Russia E. N. Makarenko Rostov State University of Economics, Rostov-on-Don, Russia P. A. Lifanov Volgograd State Technical University, Volgograd, Russia

JEL Codes

М12 · М14 · Р36 · Р46 · Q01 · Q56

1

Introduction

In the modern globalising world, higher education and the implementation of new innovative methods of personnel management became a decisive factor in the social component of sustainable development. Only a country in which intellectual professions became widespread and investments in human potential development became important and effective can be a full member of the global economy. Adoption— at the level of economic subjects and country on the whole— of a course toward stimulation of personnel training for possible changes in technologies and requirements to work is a sign of social responsibility before society. Development of conditions, which imply high social standards (high level of higher education, decent wages) allows a state to ensure attractive opportunities for life and development of wide groups of the population. Provision of the quality of higher education and personnel training is necessary for effective HRM at the level of economic subjects of all spheres, which are sources of national GDP and innovative development of the economy. Accordingly, higher education is an element of reduction of sustainable development risks, and a flexible system of HRM at the level of companies is a component of protection from economic and social risks. HRM, which is oriented toward the involvement of personnel in ecologisation of production and technologies, may facilitate

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_67

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the reduction of environmental risks. Given the importance of the spheres of higher education and HRM in the provision of reduction of sustainable development risks, the research of the specifics of this problematics is very important for modern science. The goal of this paper is to identify the main aspects of the influence of training of human resources in the sphere of higher education and HRM on the reduction of sustainable development risks. The following tasks are solved in this paper: revealing the connection between the impact of the level of higher education and HRM on the reduction of sustainable development risks; classifying the specific features of the influence of higher education and HRM on the reduction of these risks.

2

Materials and Methods

The issues of the impact of higher education and its affordability, innovative directions of HRM and their impact on the Sustainable Development Goals, and reduction of risks in this sphere at the level of communities and countries have been studied in (Aaltonen & Siltaoja, 2022; DiazCarrion et al., 2018; Dalipi et al., 2022; Hietanen & Svedholm-Häkkinen, 2022; Hueske et al., 2022; Palm et al., 2020; Salo et al., 2022; Vestola et al., 2021; Zawacki-Richter, 2021). The researchers’ approaches to the analysis of the given problems are not comprehensive, since there is no complex systematisation of the specifics of the impact of higher education and HRM on the reduction of sustainable development risks, which predetermines the necessity for the assessment in this direction. In this research, we use the following range of methods. The study of the specifics of the impact of the given elements on sustainable development risks is performed based on the trend method, which allows distinguishing and characterising the features of the impact of higher education and HRM on sustainable development at the level of companies and countries. Statistical analysis allows designating the ranks of countries by the level of personnel training in higher education and the level of implementation of the HRM methods. Based on the study of analytical and statistical data, we use the deduction method, which is a necessity for determining the specifics of the impact of the elements of higher education and HRM on the reduction of sustainable development risks under the conditions of development of resident companies (higher educational establishments) of the studied countries.

3

Results

Let us analyse the connection between the level of personnel training in higher education and HRM and the reduction of sustainable development risks. Table 1 presents the dynamics of the indices of personnel training in higher education, HRM and sustainable development of countries that are leaders in the sphere of managing the sustainable development risks for 2019–2021 (up to 20th position). The level of personnel training in higher education is assessed through the indicator “Higher education achievement” and HRM—the indicator “Employee training”. The values of these indicators are given in the IMD World Digital Competitiveness Ranking (IMD, 2022). Analysis of the statistical materials (Table 1) has shown that the largest connection between the improvement of the level of personnel in higher education and HRM and the reduction of sustainable development risks were observed in the following countries: 1) Finland In 2019, Finland was ranked third by the sustainable development index, and first—in 2020 and 2021. This is due to the improvement of the management of the risks to the Sustainable Development Goals, connected with human resources (SDG 1, SDG 4 and SDG 8). These goals were implemented due to the adoption of social responsibility by companies and higher educational establishments. In 2020, due to the pandemic, Finland reconsidered approaches to implementing the affordability and increase in quality of higher education for its citizens. Educational programmes were transformed in favour of a 100% educational process in the remote form. Based on cooperation and consultations with representatives of employers, approaches to training in various specialities were transformed (maximum adaptation to the conditions of resolution of practical tasks) (Hueske et al., 2022). This allowed raising the level of higher education in the country in 2020 (33rd position compared to 34th position in 2019). Analysis of the materials on the activities of the five leading universities of Finland (University of Helsinki, University of Turku, Aalto University, University of Oulu, University of Tampere) showed that the following optimisation measures were implemented in 2020 (Hueske et al., 2022): – Introduction of an electronic platform of training, which imply two options: mixed training (on the territory of a

The Role of Personnel Training in Higher Education and HRM to Reduce the Sustainable. . . Table 1 Dynamics of the indices of higher education achievement, employee training and sustainable development of selected countries in 2019–2021 Rank Country/indicator 2019 2020 1. Higher education achievement Denmark 23 27 Sweden 21 22 Finland 34 33 Austria 36 35 Germany 46 49 Netherlands 22 21 2. Employee training Denmark 2 Sweden 10 Finland 9 Austria 1 Germany 3 Netherlands 8 3. Sustainable development Denmark 1 Sweden 2 Finland 3 Austria 5 Germany 6 Netherlands 9

2021

Change of rank, +/2019–2020 2020–2021

25 22 35 36 46 20

4 1 -1 -1 3 -1

-2 0 2 1 -3 -1

1 11 8 2 3 7

2 3 7 1 6 9

-1 1 -1 1 0 -1

1 -8 -1 -1 3 2

2 3 1 5 6 8

3 2 1 6 4 11

1 1 -2 0 0 -1

1 -1 0 1 -2 3

Source: Compiled by the authors based on (Cambridge University Press, 2022; IMD, 2022)

university, remote education with the factual presence at all courses and lectures; online education with the possibility to take an educational programme based on open access to educational and practical materials). A quick transition from stationary education to online education was not very difficult for Finnish universities, since, as of 2020, there already existed the corresponding regulatory, organisational, HR and technological basis for this; – Transformation of educational programmes in universities with the focus on a high level of graduates’ readiness for work in companies and organisations of various sectors of the economy. The formation of programmes, lectures and practical courses was performed together with the representatives of companies and organisations interested in skilled personnel. A large influence on the reduction of risks to the SDGs was made by effective directions of HRM, developed at the level of science and business in main business schools of Finland. In Finland, all business schools have EU accreditation, which envisages a mandatory course in the sphere of sustainable development management. Many large companies in Finland have a practice of training (advanced training) of personnel in

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specific programmes of business schools, which also include a course on sustainable development (Aaltonen & Siltaoja, 2022). The key direction of the development of HRM in the context of the achievement of the SDGs is a strategy of small goals. This concept implies the management of personnel within the main spheres and processes given the production and economic effectiveness for the implementation of the specific direction, adopted by the company as an obligation in reducing the risks to the SDGs. The focus on small goals (specific, local) is the key to the strategy of managing sustainable development risks at the level of a country (Salo et al., 2022). Given this, Finnish enterprises adapt the approach of the national governance system in this sphere. 2) Sweden In 2019, Sweden was ranked second by the sustainable development index, in 2020—third, and in 2021—second. Swedish higher education has solid positions in the world ranking (2019—21st, 2020 and 2021—22nd). A certain decrease in the level of higher education, which took place in 2020 due to the impact of the pandemic, was caused by the insufficient transition of the country’s universities to the remote form of learning (Dalipi et al., 2022; Hietanen & Svedholm-Häkkinen, 2022). As for the impact of HRM in Swedish companies on risks to the SDGs, we can note the following: – Implementation of the strategies of differentiation of personal and work time allowed raising productiveness of work and effectiveness of performance of work tasks (especially in the sphere of IT). Erasure of the limits of work schedule was especially vivid in the management of personnel and the work of the latter during the pandemic, though such tendency manifested itself much earlier when digitalisation influenced all spheres of the Swedish economy (Palm et al., 2020). Strategies of differentiation envisaged a focus on personnel’s recording the start and end of the shift; this allowed raising innovativeness and creativity of personnel, as well as the speed of work (IT sphere and online sales); – Use of the strategy of employment that implies hiring personnel with knowledge in the sphere of sustainable development at the general conceptual level and in the sphere of companies’ activities. Employees independently study the given direction within universities’ or business schools’ programmes and receive the corresponding attestation (Diaz-Carrion et al., 2018). Unlike Denmark, Sweden uses the orientation toward the independent study of the basics of sustainable development by personnel. The requirements for knowledge in the sphere of managing the risks to the SDGs are set to personnel

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K. V. Vodenko et al.

(middle and upper level) in large companies that work with foreign partners; – Focus on the personnel’s independent creation of teams, which does not imply the top management’s interference with the HR policy (Vestola et al., 2021). Such an approach (delegation of HR policy in projects) is used in the case of the effective implementation of planned indicators of product manufacture (provision of services, etc.).

3) Germany In 2019–2020, Germany was ranked sixth by the sustainable development index and in 2021—fourth. Though the sphere of personnel training in higher education in Germany was not characterised by high affordability for the population, the year 2021 saw certain changes in its system, which included the expansion of remote education (Zawacki-Richter, 2021). Many programmes and courses in German universities transferred to the 100% remote accelerated form. Despite the existence of problems in this direction, the implementation of digitalization in the system of higher education in Germany allowed expanding opportunities for education for the population, which influenced the management of risks to SDG 4 and SDG 8. It is necessary to note the influence of the development of methods and approaches to HRM in Germany on the reduction of risks to the SDGs. Most of the large companies in Germany that demonstrate high results in sustainable development within the main components (social, environmental and economic) strive toward the attraction of personnel to the implementation of the adopted corporate obligations. This is based on the principle of volunteering and partnership, while the acquaintance with the goals and tasks of each employee in this sphere is performed at the level of teams. Personnel’s participation in the management of risks to the SDGs of companies (participation in environmental and social projects) is implemented through the attraction to team volunteering. Accordingly, the key strategic direction of the influence of HRM on the sustainable development of German companies is the attraction and involvement of personnel in team volunteering (an example of the development of this direction in the insurance company Allianz).

4

Discussion

In the course of the research, we identified the modern specific features of the influence of higher education and HRM on the reduction of risks to the SDGs, which include the following:

– Implementation of online platforms of education, which allow expanding access to higher education under the conditions of possible limitations of stationary education in universities. This facilitates the management of the risks to SDG 4 and SDG 8. Most of the universities of the leading countries by managing the sustainable development risks reoriented their educational programmes after the 2020 pandemic, in the context of new challenges in this sphere; – Focus of educational programmes on the training of university graduates for the maximum readiness for work at companies of the designated spheres. This direction implies the attraction of representatives of employers (companies) to the development of programmes, courses, lectures and practical workshops; – Development and implementation of the strategies of HRM, which imply the resolution of tasks in the sphere of sustainable development, in partnership with scholars and consultants of the leading business schools. The interaction with scientific institutions stimulates the formation of scientifically substantiated approaches in this sphere, with possible adaptation to the specific conditions of experience of other companies and other sectoral directions; – Use of the approach to personnel management that is based on a clear differentiation of work time and personal time, which facilitates the growth of productiveness; – Involvement of personnel in the reduction of risks to the SDGs with the help of mandatory requirements to knowledge in this sphere, as well as through partnership training and cooperation. Using this method, many large companies implement social and environmental projects that minimise the sustainable development risks; – Delegation of HR authorities under the conditions of functioning of cyclic teams, which are created for temporary projects. This leads to better achievements of the projects’ goals and the development of new approaches to team management.

5

Conclusion

The considered features of the influence of higher education and HRM on the reduction of sustainable development risks demonstrate the modern characteristics of the problematics. This is confirmed by the tendencies of the change in approaches to the creation of the system of higher education and the system of human resources management under the influence of the pandemic and its consequences. Transformations in these spheres took place under the conditions of the management of reduction of the risks to the SDGs in countries that demonstrate the highest

The Role of Personnel Training in Higher Education and HRM to Reduce the Sustainable. . .

achievements in sustainable development. Accordingly, the sphere of higher education and HRM depends on the influence of unpredictable factors, though they possess sufficient potential for quick adaptation to new challenges and conditions of functioning. Implementation of the designated directions of the given spheres in countries that focus on the reduction of the risks to the SDGs requires their reconsideration according to the Sustainable Development Goals, given the specifics of human resources development at the national level. Implementation of transformations in the system of higher education and HRM may have higher effectiveness in the case of partnership interaction between subjects, institutions (scientific environment) and enterprises. Acknowledgments The research was performed within the grant of the President of the Russian Federation for state support for the leading scientific schools of the Russian Federation (NSh-239.2022.2).

References Aaltonen, V., & Siltaoja, М. (2022). How they walk the talk: Responsible management education in Finnish business schools. Wiley. Business Ethics, the Environment & Responsibility. Accessed July 17, 2022, from https://onlinelibrary.wiley.com/doi/epdf/10.1111/ beer.12456 Cambridge University Press. (2022). Sustainable development report. Accessed July 17, 2022, from https://dashboards.sdgindex.org/ rankings Diaz-Carrion, R., López-Fernández, M., & Romero-Fernandez, P. M. (2018). Developing a sustainable HRM system from a contextual

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perspective. Corporate Social Responsibility and Environmental Management, 25, 1143–1153. Dalipi, F., Jokela, P., Kastrati, Z., Kurti, A., & Elm, P. (2022). Going digital as a result of COVID-19: Insights from students’ and teachers’ impressions in a Swedish university. International Journal of Educational Research Open, 3. Accessed July 17, 2022, from https://www.sciencedirect.com/science/article/pii/ S2666374022000152 Hietanen, M., & Svedholm-Häkkinen, A. M. (2022). Transition to distance education in 2020 – Challenges among university faculty in Sweden. Scandinavian Journal of Educational Research, 1. Accessed July 17, 2022, from https://www.tandfonline.com/doi/ full/10.1080/00313831.2021.2021444 Hueske, A.-K., Pontoppidan, C. A., & Iosif-Lazar, L.-C. (2022). Sustainable development in higher education in Nordic countries: Exploring E-Learning mechanisms and SDG coverage in MOOCs. International Journal of Sustainability in Higher Education, 23(1), 196–211. IMD. (2022). World Digital Competitiveness Ranking. Accessed July 17, 2022, from https://www.imd.org/centers/world-competitivenesscenter/rankings/world-digital-competitiveness/ Palm, K., Bergman, A., & Rosengren, C. (2020). Towards more proactive sustainable human resource management practices? A study on stress due to the ICT-mediated integration of work and private life. Sustainability, 12, 8303. Accessed July 17, 2022, from https://www. mdpi.com/2071-1050/12/20/8303/htm Salo, H. H., Berg, A., Korhonen-Kurki, K., & Lähteenoja, S. (2022). Small wins enhancing sustainability transformations: Sustainable development policy in Finland. Environmental Science & Policy, 28, 242–255. Vestola, E. N., Eriksson, P. E., & Larsson, J. (2021). Temporary and permanent aspects of project organizing – operation and maintenance of road infrastructure. International Journal of Managing Projects in Business, 14(7), 1444–1462. Zawacki-Richter, O. (2021). The current state and impact of Covid-19 on digital higher education in Germany. Human Behavior and Emerging Technologies, 3, 218–226.

Values of Modern Organizations and Social Responsibility of Scientific Institutions Anzhela M. Salogub

and Marina A. Arselgova

Abstract

JEL Codes

Purpose: clarification of the values of modern organizations in the context of globally regulated goals and actions in the field of social partnership and sustainable development, and their reflection in the implementation of the concept of social responsibility in social institutions. Design/methodology/approach: analysis of UN documents and scientific publications in the field of goals and actions in the field of social partnership and sustainable development in the context of ESG paradigms, the concept of social responsibility and the “triple helix” of innovative cooperation. Findings: the space of organizational values of scientific institutions within the framework of goals and actions in the field of social partnership and sustainable development is defined. Targets in the system of social responsibility of scientific institutions are proposed. The necessity of developing an ESG industry standard for scientific institutions of the Russian Federation is substantiated. Originality/value: The research materials can be used as a basis for the development of a strategy for social management of scientific institutions and the basic ESG industry strategy, including standard sections on the social responsibility of research subjects.

А13 · М14 · Q56

Keywords

Organizational values · Scientific institutions · Social responsibility · UN Sustainable Development Goals · Innovation · Social management

A. M. Salogub (✉) Pyatigorsk State University, Pyatigorsk, Russia M. A. Arselgova Pyatigorsk State University, Pyatigorsk, Russia Ingush Research Institute of Humanities named after Ch. Akhriev, Magas, Russia

1

Introduction

Currently, social management is becoming important in the interactions of organizations with the internal and external environment, the most important aspect of which is the systemic management of social responsibility. Meanwhile, many areas of practical activity show an important role of goalsetting process in the system of social responsibility—the lack of long-term management practice in this area, qualified competencies and a system of accumulated organizational knowledge reduces the potential for effective management in the subject area. This primarily concerns scientific institutions that, being representatives of the non-profit sphere, began to adopt the best practices of social responsibility management rather late and they are currently in the process of refining organizational values. In this regard, it is extremely important to act on the basis of normatively fixed universal values and goals in the field of social partnership and sustainable development, enshrined, first of all, at the international level, in the UN document “Sustainable Development Goals” (Sustainable Development Goals, n.d.) (in particular, SDG 4—“Quality education” and SDG 17 “Partnership for sustainable development”), as well as the “Decade of Action” (Decade of Action, n.d.) to achieve the Global Sustainable Development Goals (in terms of the actions of representatives of the scientific community to ensure “steady dynamics towards the implementation of necessary transformations” in society and the economy). The purpose of this study is a theoretical analysis of the values of modern organizations in the context of the globally regulated goals and actions in the field of social partnership and sustainable development, and their implementation in

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_68

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creating a space of social responsibility of scientific institutions.

2

Methodology

The basis of this publication is dialectical and systemstructural methods of cognition, the method of analysis of normative documents, comparative and concrete historical methods. The research is based on the analysis of relevant scientific publications, as well as strategic international documents in the field of sustainable development. The theoretical basis of the research is the provisions of a number of scientific concepts and paradigms, including the concepts of sustainable development and ESG (sustainable development, social partnership and improvement of corporate administration), the concepts of social responsibility and social partnership, the paradigm of the “triple helix” of interaction between the state, scientific institutions and business in the framework of expanded reproduction of innovations.

3

Results

Organizational values are usually understood as a set of business and moral principles and beliefs, traditions and internal spiritual foundations, which are the most significant and shared by the members of the organization related to the creation and functioning of the latter, reflecting its organizational personality and forming the basis for its successful, long-term development (Bakuradze, 2018, p. 22). The main organizational values shared by companies of any type and field of activity: the creation of socially beneficial value for the consumer, the steady improvement of the quality of goods or services, staff development, environmental friendliness, contribution to the social and economic improvement of society, the solution of global and national problems. Making a profit is considered as a value of a dual nature. Proponents of the concept of “profit is the main value of the organization” [M. Friedman: “making a profit is the social responsibility of business” (1970)] believe that the profit can then be directed to social benefits, because making a profit is a necessary and sufficient social goal of the organization. In practice, everything turns out to be much more complicated, since in the process of carrying out socially significant activities, implementing a socially responsible model of behavior, the organization, management and staff receive valuable social experience, which is then converted into improving the efficiency of the organization’s management. Organizational values are closely related to various aspects of the social life of an organization, acting as the basis for numerous superstructure phenomena, including

such as social partnership and social responsibility—the latter seems advisible to study in more detail. The authors generally consider the social responsibility of a modern organization as a set of advanced commitments to the subjects of the internal and external environment and actions to implement them in order to ensure priority interests of social development and sustainability in changing environmental conditions (Salogub & Arselgova, 2020, p. 119). Social responsibility is considered in two complementary spheres—internal (to the staff of the organization, in relation to scientific institutions—first of all, to research scientists) and external (to a wide range of stakeholders, to society as a whole). The presented division is to a certain extent conditional (the staff is also among the stakeholders of scientific institutions), however, in the ESG concept it manifests itself quite clearly—external social responsibility is included in the social sphere of management, while internal is more related to the improvement of organizational administration and the application of innovative approaches to personnel management. Pointing to the fact that the values of organizations significantly affect the implementation of social responsibility, it would be wrong not to mention that there is also an inverse relationship—in the process of formation and implementation of the principles of social responsibility of the organization, organizational values are corrected, as well as new values are created and introduced. Such values by their essence are most focused on the productive interaction of the organization and society and carry significant existential value; the process of formation of productive, socially significant organizational values is one of the most important characteristics of the importance of social responsibility management, which not only creates direct social utility, but also stimulates productive organizational development. It is important to clarify the space of socially significant organizational goals of scientific institutions. First of all, it should be noted that modern organizations, both commercial and non-commercial, exist in a common social space and act as subjects of numerous social interactions. For organizations such as scientific institutions (by which we understand non-profit structures that carry out research and development as independent organizational entities and as non-profit separate structures of commercial and government organizations) aspects of integration into social interaction are especially important. It is the society that defines the importance of scientific and research activities (especially in relation to fundamental developments), forms the main request to science and defines by its attitude the acceptable norms and bounds in ethics and methodology of scientific activity (philosophers have been working on clarifying the latter for thousands of years, since ancient history). In the modern conditions of the new industrial revolution and the rapid breakthrough of scientific and technological

Values of Modern Organizations and Social Responsibility of Scientific Institutions

progress, it is scientific institutions that are assigned an advanced role in the complex of social interactions, which, in our opinion, is best described in the Itskowitz-Leidersdorf “Triple Helix” model (Salogub & Arselgova, 2021, p. 131), where the interaction of the public sector, scientific institutions and the business community generates the continuous formation of subjects of new innovative activity, thereby forming an expanded reproduction of innovations in this society and stimulating socio-economic development at a faster pace. The system of organizational values, which is so important in the context of fruitful and effective social interaction in the internal and external environment, is formed, in many respects, in a stochastic way, but in recent decades it has been increasingly characterized by normative certainty (Durand et al., 2019, p. 301), although the initial development of organizational values was formed in the context of the institutionalization of corporate culture. Social values are characteristic of both commercial corporations and organizations of the non–profit sector, however, it is the corporate segment that has a historical role in systematizing and documenting the complex of organizational values (Lubis & Hanum, 2020, p. 90)—in modern conditions, corporate social, moral, ethical and other similar codes become the normative foundation in the system of regulating values of a wide range of organizations—of course, only if they reflect the best industry practices. Currently, practices based on the principles of expanded perception of social responsibility and social partnership are recognized as substantially non-alternative (Ahmed et al., 2021, p. 499), although a few decades ago such an approach did not act as an axiom at all—it suffices to recall the widespread idea of the Nobel laureate, American economist Milton Friedman that the only social responsibility of corporations is to make a profit (Friedman, 1970). The approach of M. Friedman and his supporters to the perception of social responsibility already in the 80s of the twentieth century was recognized as unsound, including on the basis of evidence obtained through numerous econometric experiments (Dunn & Burton, 2006). It turned out that the comprehensive implementation of social responsibility (hereinafter also SR) brings benefit both to the organizations themselves and the community at large, in particular by contributing to the continuous enrichment and development of social practices. The postulate that the measurement of social responsibility is not identical to the amounts of money spent on charity and other social projects has become the basis for the institutionalization of the system of social responsibility in the non-profit sphere, including the system of social management of scientific institutions.

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Institualization of guidelines in the field of organizational values contributes significantly to the systematic work on the management of social responsibility of scientific organizations. Such guidelines, which form the basis of advanced achievements and goals of humanity in the field of sustainable development and social partnership, are reflected, in particular, in the previously mentioned UN Sustainable Development Goals 4 and 17 and in the “Decade of Action”: – scientific institutions, as an environment for uniting the efforts of numerous scientists—representatives of the scientific community, should be considered as a fundamental basis and a source of concentration of people’s actions aimed at ensuring the steady achievement of global sustainable development goals. Global goals should be perceived by representatives of the scientific community as their own, and, therefore, transformed into organizational goals of scientific institutions. A specific scientific institution can contribute to the achievement of the global Sustainable Development Goals in accordance with its profile, therefore, these goals should be declared as the main goals of the implementation of social responsibility. Among them: – mobilization of efforts of employees and management of scientific institutions to ensure sustainable development and achieve social well-being; – intensification of the research activities to generate new ideas and transform existing solutions in order to promote sustainable innovations, investments and technologies aimed at solving global problems of sustainable development, creating jobs, promoting youth employment and ensuring the development of the local community, etc.; – providing exclusive guarantees that research activities will be used for the benefit of social development and universal sustainability and, moreover, not the other way around, thereby forming the boundaries of the ethics of scientific research; – scientific institutions are the sphere of concentration and accumulation of knowledge. They assume increased obligations for the training and development of their employees as an element of internal social responsibility, and work to improve the educational level of the population as an element of external social responsibility. The latter can be implemented in specific situations through mechanisms for promoting scientific knowledge, involving scientific institutions in internships and practices of schoolchildren, students, young workers; quotas and subsidized jobs for young research scientists; active participation in the exchange of knowledge and experience, including among persons engaged in their professional

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training and retraining; creation of educational and educational centers at scientific institutions; development of teaching and methodological literature, including on a voluntary basis for non-commercial dissemination and use in teaching activities, etc.; – scientific institutions are encouraged to participate actively in sustainable social, economic, environmental development, which is impossible without a reliable long-term partnership at all levels, for which they initiate and enter into social partnerships on a voluntary basis and with high motivation, including through the formation of specialized partner structures, such as cross-functional research groups, innovative enterprises, international teams of research scientists, etc.

4

Conclusion

The normative goals and actions in the field of social partnership and sustainable development are aimed to become a key guideline in the construction of a new value system of scientific organizations, and they have been included into practical activities for the management of social responsibility. The normative character of the values of scientific institutions ensures the unity of the principles and management of social responsibility—this circumstance is considered as extremely important in the context of measures to overcome the lack of competence in the field of management by most modern Russian research organizations and institutions. First of all, it is a question of the best sectoral practices, as well as the formation of a unified context for learning and advanced training of specialists in the field of SR management in scientific institutions. We believe that it is advisable to combine efforts and provide for the development of the ESG standard for scientific institutions of the Russian Federation at the level of the entire system of scientific institutions of the country in order to disseminate the best sectoral practices. At the same time, in the social section of the standard, special attention should be paid to the aspects of the application of the presented provisions related to goals and actions in the field of social

partnership and sustainable development, in the implementation of internal and external social responsibility.

References Ahmed, J. U., Islam, Q. T., Ahmed, A., Faroque, A. R., & Uddin, M. J. (2021). Corporate social responsibility after COVID-19: Numerous examples of social responsibility as an organizational value. Society and Business Review, 16(4), 496–516. https://doi.org/10.1108/SBR09-2020-0113 Bakuradze, A. B. (2018). Functions and hierarchy of values of the management of the social organization. Bulletin of Tver State University. Series: Philosophy, 1, 17–26. Decade of Action. (n.d.). The UN official website. Accessed January 20, 2022, from https://www.un.org/sustainabledevelopment/ru/ decade-of-action Dunn, C. P., & Burton, B. K. (2006). Friedman’s “The social responsibility of business is to increase its profits”: A critique for the classroom. Proceedings of International Association of Business Society. Accessed January 18, 2022, from https://goo.su/biEr Durand, R., Hawn, O., & Ioannou, I. (2019). Willing and able: A general model of organizational responses to normative pressures. Academy of Management Review, 44(2), 299–320. https://doi.org/10.5465/ amr.2016.0107 Friedman, M. (1970). A Friedman doctrine – The social responsibility of Business is to increase its profits. The New York Times. Accessed January 09, 2022, from https://www.nytimes.com/1970/09/13/ archives/a-friedman-doctrine-the-social-responsibility-of-businessis-to.html Lubis, F. R., & Hanum, F. (2020). Organizational culture. Proceedings of the 2nd Yogyakarta International Conference on Education Management. Administration and Pedagogy (YICEMAP 2019). Advances in Social Science, Education and Humanities Research, 511, pp. 88–91. Atlantis Press. Accessed January 20, 2022, from file:///C:/Users/Windows%208/Downloads/125949878.pdf Salogub, A. M., & Arselgova, M. A. (2020). Implementation of the principles of corporate social responsibility in the activities of scientific institutions. University readings – 2020. Materials of scientific and methodological readings of PSU. : Publishing House of PSU, pp. 118–124. Salogub, A. M., & Arselgova, M. A. (2021). Social responsibility management of a scientific institution based on the principles of the triple helix model. Bulletin of the Ingush Research Institute of Humanities named after Ch. E. Akhriev, 1, 130–133. Sustainable Development Goals. (n.d.). The UN official website. Accessed January 20, 2022, from https://www.un.org/ sustainabledevelopment/ru/sustainable-development-goals

Regulatory and Legal Provision of Sustainable Development Risk Management in the Agro-industrial Complex: An Overview of International Experience Meerimai Z. Karbekova and Elena V. Sofiina

, Ilimkan J. Atybaeva

Abstract

A. A. Nabokikh (✉) Vyatka State University, Kirov, Russia E. V. Sofiina Federal State Budgetary Educational Institution of Higher Education “Vyatka State Agrotechnological University”, Kirov, Russia

,

Development Goals and propose a complex of balancing the sustainable development risks of the sector. We also prove the key role of the institutional management at the international, regional and national levels, which is manifested also through the common international architecture of the regulatory and legal provision of sustainable development of the agro-industrial complex. We identify the common features and differences between the use and priority of different legal tools, based on the state of the development of the economy and the domination of certain risks. We offer a concept of balancing the sustainable development risks of the agro-industrial complex and substantiate the character and reasons for differences in the regulatory and legal provision of managing the risks of sustainable development of the agro-industrial complex in different regions of the world.

This research is aimed at structuring, analysing and generalisation of the international experience of managing the risks of sustainable development of the agro-industrial sector of the economy in the context of achievement of the Sustainable Development Goals at the regional and national levels. We use the systemic approach, which allows, on the one hand, considering the international system of managing the risks of sustainable development in the agroindustrial complex as a whole, and, on the other hand, interpreting the existing risks and mechanisms of their management from the position of their mutual influence on the achievement of the Sustainable Development Goals. The offered methodology is supplemented by the elements of the process approach, which is implemented in the context of the legal regulation of the procedures of managing the risks of food supply chains and provision of its quality, as well as the elements of analysis and synthesis, which allows identifying the differences between regional and national systems of managing the risks of sustainable development of the agro-industrial complex. The agro-industrial complex is a complex system, which is peculiar for specific risks in the context of the provision of sustainable development. These risks are based on the essence of agro-food production, which, in its turn, is based on the use of the elements of the natural environment as separate production factors. Based on this, we substantiate the conflicting character of the business interests of agro-industrial companies and the Sustainable M. Z. Karbekova · I. J. Atybaeva International University named after K.Sh. Toktomamatov, Jalal-Abad, Kyrgyzstan

, Aleksei A. Nabokikh

Keywords

Sustainable development · Risk management · Sustainable development risks · Agro-industrial complex · Agro-food system

JEL Codes

K 30 · K 32 · K 33 · D 81 · F 01 · O 10 · O 13 · O 15 · O 18 · O 19 · O 40 · Q 18 · Q 30

1

Introduction

Sustainable development in the agro-industrial complex is a specific group of challenges. Unlike other sectors of the economy, where the search for balance between profitability/competitiveness, food security and sustainability is also important, this search in agriculture is further complicated by

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_69

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the spatial and agro-ecological factors, since the elements of nature in this sector are not only an external environment but also the direct production factors. Thus, agriculture, in the context of sustainable development, is peculiar for many risks, which are connected to the problem of setting the priorities in the presented triangle (competitiveness, food security and sustainability). Management of these risks envisages their identification, monitoring and development of the measures of national policy that are aimed at their restraint, neutralisation and elimination. In such conditions, the regulatory and legal provision of the processes of managing the risks of sustainable development in the agro-industrial complex is aimed at balancing short-term effectiveness and long-term transformation of production and logistical systems (Darnhofer, 2014) and is based on an understanding of the fact that any failure in risk management may create large problems for the achievement of the Sustainable Development Goals (Choirun et al., 2020). Based on this, the regulatory and legal mechanisms of provision of managing the risks of sustainable development in the agro-food sector should have a sustainable architecture, based on international institutions, and take into account the regional and national specifics through the development and implementation of the specifics norms, programmes and strategies.

the agro-industrial complex, especially in the context of the generalisation of the international experience of regulatory and legal provision of these processes. In most cases, this problem has been studied fragmentarily, within separate directions. This includes the study of the specifics of sustainable development from the position of farmers and the agroindustrial complex (Darnhofer, 2014; Negra et al., 2020; Notarnicola et al., 2017); research of the totality of risks that are peculiar to the agro-industrial complex and their interconnection with sustainable development (Komarek et al., 2020); study of the global, regional and national systems of managing the risks of sustainable development of the agro-industrial complex (Carlisle et al., 2019; Nhemachena et al., 2018; Saba, 2020; Siegel & Lima, 2020; Soriano et al., 2020; Yu & Wu, 2018); study of risk management of sustainable development of the agro-food systems in the context of supply chains management (Choirun et al., 2020; Hammoudi et al., 2009). The main goal of this paper is to analyse and characterise the international architecture of the regulatory and legal provision of managing the risks of sustainable development of the agro-industrial complex, searching for the specifics and differences in the national systems of the management of these processes and identifying the directions for their improvement.

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Materials and Methods

The methodology of this paper consists of the systemic approach, which allows studying and reflecting the presence of mutual ties between different risks of sustainable development of the agro-industrial complex, revealing their specifics and reflecting the conceptual directions of balancing the interests of the subjects of the sector and the Sustainable Development Goals. The systemic approach also allows reflecting a comprehensive system of the regulatory and legal provision of managing the studied risks at the global, regional and national levels, characterising the mutual ties between these elements and identifying the differences in the priorities of sustainable development of the agro-industrial complex of certain countries and regions based on the domination of certain risks. The use of the elements of the process approach and the tools of analysis and synthesis allows studying the problems of managing the risks of sustainable development in the agroindustrial complex in the context of the dynamics of global and national processes, as well as determining the differences and similarities of the examples of the regulatory and legal provision of risk management in food systems. There is a limited number of comprehensive studies devoted to risk management of sustainable development of

Results

The concept of sustainable development, as the basic ideology of modern production and consumption, requires a balance in production, consumption, utilisation and use of natural resources. At that, agriculture is, objectively, the key sector of the use of natural resources for the satisfaction of the food needs of humanity. Most of the modern approaches to agriculture and farming are aimed at the depletion of land resources, increase in the volume of greenhouse gas emissions, growth of the deficit of water and emission of a large volume of polluting substances, which influence local and global eco-systems. The entire food system has the task of increasing the volume of food production by 60% until 2050. In totality, the above leads to an increase in pressure on the production system of the agro-industrial complex and on the entire natural environment (Choirun et al., 2020). Under such conditions, the study of the system of managing the risks of sustainable development in the agro-industrial complex requires additional development of mechanisms that allow identifying the ones that stimulate the achievement of sustainability in the agro-industrial complex and the ones that create additional complexities (Soriano et al., 2020). The research of the risks to the development of the agrofood sector is closely connected to the concept of the

Regulatory and Legal Provision of Sustainable Development Risk Management in the. . .

Fig. 1 The concept of balancing the sustainable development risks of the agro-industrial complex. Source: Developed by the authors

in the creation of the corresponding conditions might lead to the emergence of additional risks. In the modern world, the institutional system of managing the risks of sustainable development of the agro-industrial complex has a global character and goes far beyond the limits of the agro-food sector. The general regulatory and legal architecture of managing the studied risks at the global level is a rather stable construction with a significant share of institutional maturity in the form of the system of goals, conceptual provisions and strategies. According to the existing challenges, its basis is the Sustainable Development Goals, the 2030 Agenda for Sustainable Development and the Paris Agreement, which designate the key directions of change and development. The institutional basis of the global level includes a large list of organisations that ensure the achievement of the Sustainable Development Goals in particular directions. Apart from organisations that cover general directions, e.g., the UN Environment Programme (UNEP), Intergovernmental Panel ON Climate Change (IPCC), United Nations Development Programme (UNDP), UN Department of Economic and Social Affairs (DESA), UN Regional Economic Commissions, etc., the management of sustainable development risks of the agro-industrial complex is most fully ensured by specialised global organisations: the World Food Programme (WFP), the Food and Agriculture Organization of the United Nations (FAO) and the International Fund for Agricultural Development (IFAD).

Sustainable development

Environmental risks (climate change and environmental situation)

management of sustainable development risks of the agroindustrial complex. A general classification sees five types of risks: economic, social, environmental, institutional and technological. When designating the risks to sustainable development, most researchers mention primarily the former three risks, which are most closely connected to economic solvency (possibility to compete in the market and obtain profit), social equality and affordability (access to resources, including food) and environmental sustainability (ability to use natural resources without any harm to the climate and future generations). The specific feature of these risks lies in their different directions; to balance them, it is necessary to use technological and institutional mechanisms. The concept of balancing the above risks is presented in Fig. 1. It reflects different directions of all risks as to the state of sustainable development under the conditions of traditional technologies and institutional systems. Sustainable use of resources (reduction of the use of arable land and water and limited use of fertilizers and means of plant protection) leads to the reduction of production volumes, which aggravates the problem of food security. On the other hand, an increase in the use of natural resources allows avoiding food problems but aggravates the environmental situation, etc. Under such conditions, the effective tools for balancing the sustainable development risks are the creation of a rational institutional system and the use of resource-saving technologies. It is necessary to take into account that errors

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The activities of specialised organisations have a complex direction with a large emphasis on the achievement of five SDGs: SDG 1—No poverty; SDG 2—Zero hunger; SDG 8—Decent work and economic growth; SDG 13—Climate action; SDG 15—Life on land. The global architecture of the regulatory and legal provision of managing the risks of sustainable development in the agroindustrial complex covers goals and strategy, programmes and laws. Depending on the level of development of the economy or domination of certain risks, large emphasis in the regulatory and legal field of different regions and countries is made on the use of different mechanisms, which, in its turn, requires the adoption of the corresponding legal norms. The most comprehensive system of the regulatory and legal provision of managing the considered risks has been created in developed countries. In the EU, the agro-food system has been working for a long time according to the EU Common Agricultural Policy (CAP). The CAP is closely integrated with the concept of sustainable development and contains a set of norms and mechanisms that are aimed not only at identifying the goals and strategy but also at the creation of motivational mechanisms for their achievement, including by balancing the corresponding risks. In this aspect, the CAP includes the mechanisms of compensations for the reduction of arable lands or cattle and financial stimulation for organic farming, etc. At present, in addition to the CAP, the management of the risks to the sustainable development of the agro-industrial complex is performed through the European Green Deal and Farm to Fork Strategy (Saba, 2020), which further specify and coordinate the tasks, strategy, norms and mechanisms of achieving the Sustainable Development Goals through the search for balance between the risks to sustainable development and the use of the process approach, due to which sustainability of the food sector is ensured at all stages, from the material and technical provision and to consumption and utilisation of waste with the minimum use of natural resources and minimum harm to the environment. A similar system of the regulatory and legal provision of managing the risks of sustainable development of the agroindustrial complex exists in the USA. The focus is made on the creation of sustainable chains of food supply, which allow achieving not only the balance of the economic, social and environmental norms but also guaranteeing quality control, the balance of nature use, etc. An important role in the

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regulatory and legal provision of the management of risks to the sustainable development of the agro-industrial complex of the USA belongs to the USDA Council on Sustainable Development, different forms of dialogue between stakeholders within SPG Coalition and other initiatives of the Ministry of Agriculture (USDA, 2021). The government of China is searching for the means to balance the sustainable development risks of the agroindustrial complex through the adoption of the corresponding laws and programmes. The main norms for managing the risks to sustainable development in China are the Sloping Land Conversion Program (SLCP), aimed at solving the problem of soil erosion, and the Major Function Oriented Zoning (MFOZ), aimed at the integration of the system of land use in the unified political system (Yu & Wu, 2018). Unlike previous examples, in the regions of Africa, an important role belongs not so much to the risks of reduction of the production potential of the agro-industrial complex to preserve eco-systems as to the need to ensure food security and improve population’s health through the improvement of the structure of food and the management of the natural risks of the lack of water, extreme temperatures and excessive erosion of soil. The key norms of management of the above risks could be found in the Comprehensive Africa Agriculture Development Programme (CAADP) Agenda, aimed at developing the national plans of investing in agriculture to achieve the Sustainable Development Goals (Nhemachena et al., 2018). Countries of Latin America, in the context of thorough work on the achievement of other SDGs, make emphasis on the fight against climate change. The resolution of these problems is supported by the implementation of the Latin American Deep Decarbonization Pathways Project (DDP-LAC) (Siegel & Lima, 2020). Thus, the regulatory and legal provision of managing the risks of sustainable development of the agro-industrial complex has a comprehensive international system, with common goals, institutions and mechanisms. At the regional and global levels, the legal norms and programmes are specified depending on the domination of the corresponding group of risks or the level of development and institutional maturity of the economy. Despite the common initial conditions at the regional and national levels of management, the systems of the regulatory and legal provision of sustainable development risks of the agro-industrial complex have differences. Given the absence of the balance of risks in the management of the sustainable development of the agro-industrial complex, an important condition of achievement of the Sustainable Development Goals in the sphere is the rational institutional and technological provision. The institutional provision is presented by a common global architecture of norms and programmes, which are specified at the regional

Regulatory and Legal Provision of Sustainable Development Risk Management in the. . .

and national levels, depending on the level of development of the economy and domination of certain risks. Additional attention should be paid to the substantiation of the directions and mechanisms of technological provision for managing the risks of the sustainable development of the agro-industrial complex.

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Conclusions

The agro-industrial complex has a range of specific features, which aggravate the problems of managing the risks of sustainable development of the sphere. The combination of economic, environmental and social risks of such type does not allow coordinating them without the use of additional mechanisms of the institutional and technological character, which also create the corresponding risks. Within the institutional provision of risk management, the regulatory and legal provision is created. It has a common architecture, which includes the Sustainable Development Goals and key programmes and institutions, which ensure the administration of processes. At the regional and national levels, the detailing of the regulatory and legal provision takes place given the dominating risks of the political, climate or other character given the level of economic development. In developed countries, the emphasis in the regulatory and legal provision of managing the risks of sustainable development is made on the creation of sustainable chains of food supply, reduction of production capacities, etc., while in developing countries, the regulatory norms are primarily aimed at the provision of food security, improvement of the structure of natural resources or their replacement for the purpose of protection from climate change.

References Carlisle, L., De Wit, M. M., DeLonge, M. S., Calo, A., Getz, C., Ory, J., et al. (2019). Securing the future of US agriculture: The case for

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investing in new entry sustainable farmers. Elementa: Science of the Anthropocene, 7. Choirun, A., Santoso, I., & Astuti, R. (2020, April). Sustainability risk management in the agri-food supply chain: Literature review. In IOP Conference Series: Earth and Environmental Science (Vol. 475, No. 1, p. 012050). IOP Publishing. Darnhofer, I. (2014). Resilience and why it matters for farm management. European Review of Agricultural Economics, 41(3), 461–484. https://doi.org/10.1093/erae/jbu012 Hammoudi, A., Hoffmann, R., & Surry, Y. (2009). Food safety standards and agri-food supply chains: An introductory overview. European Review of Agricultural Economics, 36, 469–478. https:// doi.org/10.1093/erae/jbp044 Komarek, A. M., De Pinto, A., & Smith, V. H. (2020). A review of types of risks in agriculture: What we know and what we need to know. Agricultural Systems, 178, 102738. Negra, C., Remans, R., Attwood, S., Jones, S., Werneck, F., & Smith, A. (2020). Sustainable agri-food investments require multi-sector co-development of decision tools. Ecological Indicators, 110, 105851. Nhemachena, C., Matchaya, G., Nhemachena, C., Karuaihe, S., Muchara, B., & Nhlengethwa, S. (2018). Measuring baseline agriculture-related Sustainable Development Goals Index for Southern Africa. Sustainability, 10(3), 849. MDPI AG. https://doi.org/10. 3390/su10030849 Notarnicola, B., Sala, S., Anton, A., McLaren, S. J., Saouter, E., & Sonesson, U. (2017). The role of life cycle assessment in supporting sustainable agri-food systems: A review of the challenges. Journal of Cleaner Production, 140, 399–409. Saba, A. (2020). Sustainable agri-food systems, climate change and CAP strategic plans in the ambitious pathways of the EU after the green deal. Amid Challenging Times, 86. Siegel, K. M., & Lima, M. G. B. (2020). When international sustainability frameworks encounter domestic politics: The sustainable development goals and agri-food governance in South America. World Development, 135, 105053. Soriano, B., Bardaji, I., Bertolozzi, D., San Martín, C., Spiegel, A., Slijper, T., ... & Garrido, A. (2020). D 2.6 Report on state and outlook for risk management in EU agriculture. USDA. (2021). Pathways to more sustainable, resilient, and inclusive U.S. food systems. Accessed July 20, 2022, from https://www.usda. gov/sites/default/files/documents/US-Food-Systems-Pathways.pdf Yu, J., & Wu, J. (2018). The sustainability of agricultural development in China: The agriculture–environment nexus. Sustainability, 10(6), 1776. MDPI AG. Accessed July 20, 2022, from https://doi.org/10. 3390/su10061776

Theoretical Basis of Risk Management in Manufacturing Enterprises Shuhrat Z. Muxitdinov , Nazgul A. Shakirova , Gulvira A. Turdubayeva Guliza Sh. Osmonova , and Gulzar A. Asanova

Abstract

The paper examines the scientific and theoretical views of scientists on risks in manufacturing enterprises, their impact on the economy and production volume, types of risks, and their characteristics. It also focuses on the types of risks that affect a manufacturing enterprise. Moreover, the paper analyzes a set of risks and stages of risk management. It starts with risks in business. Therefore, in the literature created by Western scholars, the art of management, economic and organizational creativity, a brilliant demonstration of initiative and constant readiness for risk, etc. are assessed as a multifaceted activity. In turn, this indicates the need for effective business management, which is an important factor for manufacturing companies. In writing the analytical part of this research, the authors relied on data from the State Statistics Committee of the Republic of Uzbekistan on the share of manufacturing enterprises in GDP. Based on the analysis results, the main mechanisms of management in risk management or prevention of enterprise risks were studied. The paper suggests using the most effective methods of risk management in enterprises. Keywords

Production · Enterprise · Risk · Types of risks · Risk · Gross regional product · Set of risks · Management

JEL Codes

M1 · M11 · M110 S. Z. Muxitdinov (✉) Namangan Institute of Engineering and Technology, Namangan, Uzbekistan N. A. Shakirova · G. A. Turdubayeva · G. S. Osmonova · G. A. Asanova Kyrgyz-Uzbek International University named after Batyraly Sydykov, Osh, Kyrgyzstan

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,

Introduction

Due to the focus on the development of entrepreneurship in the Kyrgyz Republic, along with the creation of a business environment among the population, the infrastructure of production and service systems is strengthened. Many scientific and theoretical views state that entrepreneurship is an economic activity initiated by the existing laws based on risk and property liability for the benefit of property owners. Western literature considers entrepreneurship as a multifaceted activity aimed at making a profit, the art of management, economic and organizational creativity, a bright demonstration of initiative and constant readiness for risk, etc. In turn, this indicates the need for effective business management.

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Materials and Methods

Any management activity can face dangerous levels at different levels due to the multifactor dynamics of the external environment of the management object and the role of the human factor in the process of influence. In almost all branches of management theory and practice, the problem of risk assessment and management plays a special role in choosing the optimal ratio of risks and the level of management activity in the business. Scientists have developed many theoretical foundations in this regard. According to contemporary management theory, D. A. Navikov said that “the management system should include technical, natural, biological, social, and other components,” noting that contemporary management methods should include automated control, automated management, and organizational management (Navikov, 2019, pp. 11–12). M. Sharifkhojayev and Yo. Abdullayev defined the concept of risk: “a risk is the risk of complete or partial loss of a resource or income” (Sharifkhojayev & Abdullayev, 2001, p. 584).

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_70

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Table 1 Types of definitions of the theoretical basis of risk management in manufacturing entrepreneurship No. 1

Definition A Risk of total or partial loss of resources or income

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Avoid minimizing profits The probability of adverse effects in the form of loss of income or capital in the context of uncertainty in the conduct of financial and economic activities Production risks are one of the types of potential risks that affect an enterprise and are characterized by the nature of the risks that arise during the production process or in the supply of raw materials.

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Definition B Fluctuations in the markets of raw materials and finished products, unexpected changes in fashion, new inventions, the entry of new and strong competitors in their fields Risks are a factor that requires a reward The occurrence of an unpleasant consequence in case of failure to achieve the expected result

Source: Developed by the authors

A. Marshall, a British economist, believes that the risks in manufacturing are caused by “fluctuations in the markets of raw materials and finished products, unexpected changes in fashion, new inventions, the entry of new and strong competitors in their fields, and other reasons” (Marshall, 1993, p. 122).

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Results and Discussion

Manufacturing enterprises are among the entities that have the socio-economic power to ensure the stability of the country’s economy. However, changes in the times, changes in governance, and uncertainties have profoundly affected the potential and economy of manufacturing enterprises. The efficiency of manufacturing enterprises also depends on key factors, such as political, economic, social, environmental, and technological factors. Production risks have their own characteristics. Risks are divided into internal and external types, which can manifest at different levels of the production process and lead to different risks. The research process shows that when considering the definitions given by scientists on the theoretical aspects of risk management in manufacturing entrepreneurship, they can be divided into two types (Table 1). As can be seen from Table 1, the negative effects of risks in manufacturing are assessed in column A, mainly on the

impact on resources, income, capital, and raw materials. In column B, changes in market relations, competition, unfavorable conditions, and demand for rewards are assessed as the effects of motivating factors. In today’s economy, risk management involves three key areas: 1. Identification of risks in the activities of business entities in conditions of risk and uncertainty; 2. Develop the ability to respond to possible negative consequences in the course of activities; 3. Develop and implement measures that can neutralize or compensate for adverse effects. It should systematically express the uncertainty of the relationship between the optimal alternative and the consequences of economic transactions carried out by the entrepreneur (Fig. 1). It can be concluded from the figure that the main risks affecting the management of a manufacturing enterprise are factors such as raw materials, natural resources, market demand, and changes, which directly impact the risk profile complex of the manufacturing enterprise. Risk management is now a key factor in any business. This is because any organization operates under uncertainty and seeks to increase revenue in a constantly changing market environment. The risk factor arises in different areas of activity; timely identification, analysis, and appropriate

Fig. 1 A set of risks that affect a manufacturing enterprise. Source: Author development

Risk profile of the manufacturing enterprise Production strategy

Shareholders and investors

Technological updates

Politics

Changes in the financial system Level of competition

Uncertainty of the future International economic relations

Currency policy

Theoretical Basis of Risk Management in Manufacturing Enterprises I Define the purpose of the risks

II Determine the impact of risks

III Identify risks affecting production

IV Development of measures to prevent risks affecting production

V Implementation of the action plan

VI Monitoring the implementation of the action plan

Fig. 2 The stage of organization of risk management in a manufacturing enterprise. Source: Author development

decision-making on specific risk management allow the organization to avoid harm. Therefore, the company’s protection mechanism is one of the factors of success. Therefore, the organization of risk management activities in enterprises is one of the most pressing issues and requires special attention (Jeynes, 2012, p. 7). The organization of risk management in a manufacturing enterprise is a system of measures aimed at the rational integration of all its elements in the risk management process (Fig. 2). As can be seen from the picture, the stages of risk management in manufacturing enterprises require the adoption and constant monitoring of a program of measures to identify and prevent the risk factors that affect production. In turn, this will increase management efficiency by identifying and eliminating factors that affect production. The effective organization of the risk management process in the activities of manufacturing enterprises should consider the following: • Identify situations and unfavorable conditions that do not achieve the set goals; • Consider the harmful properties that affect production;

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• Take measures to minimize and manage risks in the manufacturing business. According to studies, to increase the effectiveness of risk management in manufacturing enterprises, it is necessary to reserve some of the production resources, which will allow eliminating the financial consequences associated with the risks.

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Conclusion

In conclusion, the economic aspects of risk management in manufacturing should be aimed primarily at maintaining economic stability. Their main task is to adapt to stable periods in the development of the economy, implement management methods that maximize the maintenance and improvement of economic stability, and implement decision-making. Risk management is a set of procedures and technologies for making and implementing management decisions aimed at limiting (minimizing) risks in ensuring the economic sustainability of manufacturing enterprises. Therefore, risk management is often presented as a system of managing economic, primarily financial, relationships that develop in an enterprise in a risk environment. It is important to note that risk management is not aid in itself but an aid to the organization’s core business. Risk management is a tool to help an enterprise achieve its goals.

References Jeynes, J. (2012). Risk management. Principles and leadership: A textbook (Trans. from English). (Original work published 2001). Marshall, A. (1993). Principles of economics (3 Vols.) (Trans. from English). Progress. (Original work published 1890). Navikov, D. A. (Ed.). (2019). Management theory: A textbook. Institute of Control Sciences RAS. Accessed March 19, 2022, from https:// www.ipu.ru/sites/default/files/page_file/Т2.%20Дополнительные% 20главы%20теории%20управления.%20Под%20ред.%20Д.А.% 20Новикова.pdf Sharifkhojayev, M., & Abdullayev, Y. (2001). Management: A textbook. Tashkent Financial Institute. Accessed March 19, 2022, from http://www.agriculture.uz/filesarchive/Menejment_2011.pdf

Problems of Increasing Investment Attractiveness of the Agro-industrial Complex of the Kyrgyz Republic and Ways to Solve Them Abdimitalip A. Baimuratov , Marat T. Zikiraev , Aselya S. Kayipkulova Tynara E. Kerimbaeva , and Fatima S. Parpieva

Abstract

The paper aims to assess the current state of the agroindustrial complex of the Kyrgyz Republic and identify the problems of improving the investment attractiveness of the industry. The research methodology includes general and special methods for assessing the socioeconomic state of the agro-industrial complex of the Kyrgyz Republic, such as comparative analysis, synthesis, and logical generalization. Based on the research results, the authors identified the factors contributing to the increase in investment activity in the agro-industrial complex. The authors also identified specific measures to develop and improve the competitiveness of the industry and its products and, ultimately, to solve the problem of food security of the population. The authors believe that the key factor in the development of the agro-industrial complex of the country as a result of improving the efficiency of organizations of the agro-industrial complex is the improvement of the system of state regulation and support of this priority sector of the national economy. The authors allocated the following main directions of state regulation of investment activity of business entities: (1) increasing the investment attractiveness of the industry and stimulating the attraction of investment in the sector by improving the organizational and economic conditions for investment in agricultural production; (2) increasing government spending on funding for agricultural science; (3) development of public-private partnership mechanisms, participation of the state in investing in the agricultural sector to improve the production infrastructure of agricultural production and social infrastructure of rural areas; development of investment based on co-financing with private investors (under special programs to convert the savings of the population into an investment); (4) funding innovative programs and products through tenders; (5) protection of A. A. Baimuratov · M. T. Zikiraev (✉) · A. S. Kayipkulova · T. E. Kerimbaeva · F. S. Parpieva Osh Technological University, Osh, Kyrgyzstan

,

the interests of investors-producers of agricultural products. Keywords

Investment activity · Investment attractiveness · Agroindustrial complex · Government regulation · Food security

JEL Codes

D20 · E20 · F14 · F15 · R19 · Q10

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Introduction

Market relations have put new requirements in the field of regulation and development of the agro-industrial complex before the state. These requirements are associated with the ability to predict trends in its development and make informed managerial decisions in the current unstable geopolitical situation. The agro-industrial sector traditionally needs government support and regulation. Simultaneously, the development of the agro-industrial sector, like any other sector of the national economy, directly depends on the level of investment, especially in innovation activities of enterprises and organizations of the industry. Nowadays, the main task is to ensure the food security of the Kyrgyz Republic through the innovative development of the agroindustrial complex and improve the industry’s competitiveness in the current situation of lack of necessary and sufficient conditions for investment. Let us note that investment activity is understood as motivated and financially backed activities of entrepreneurs to expand and develop business (Haidar, 2012).

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_71

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Methodology

The agro-industrial complex (AIC) combines the sectors serving agricultural production, agriculture itself, the processing of agricultural raw materials, and agricultural trade (Fig. 1). Providing food to citizens and raw materials to industry, the agricultural sector has traditionally been among the priority sectors of the national economy and the most important areas of material production. The share of agriculture in the structure of Kyrgyzstan’s economy is 65%. Thus, the socioeconomic importance of the sector is extremely high; it helps reduce social tensions in society and employs the country’s population (Kamchybekov et al., 2018). According to official statistics, agriculture (including fisheries) ranks fifth in terms of the share of GDP of the Kyrgyz Republic (14.7% in 2021), being one of the leading sectors of the economy (Fig. 2). According to the analytical data, in 2021, there was a tendency for the share of the agricultural sector in GDP to increase compared to 2020 (14.7% vs. 13.6%). In 2021, production in agriculture decreased by 5.0% compared to 2020 (there was a 0.9% increase in 2020) due to an 11.6% decrease in crop production. Analysis of data on the gross output of agriculture in 2017–2021 showed that, despite the economic and financial difficulties, the total volume of agricultural production tends to increase (Table 1). The dynamic analysis presented in Table 1 shows that in recent years the industry’s gross output has had a positive growth rate, except in 2019 (98.2%); the average annual growth rate was 5.5%; the increase in 2021 compared to 2017 equaled 25%. According to data for 2021, the share of crop production in gross output of agriculture, forestry, and fisheries was 51.5%, and livestock production was 48.5%. Analytical data predicted the crop production output in 2021 to be 240,757.8 million soms with a growth rate of 113.5% compared to 2020. The production of fruit and berry crops increased by 41.3%, potatoes—by 32.7%, cereals and legumes—by 13.8%, melons—by 11.8%, and cotton—by 7.2%.

Investment refers to monetary funds, securities, and other property, including property rights and other rights that have a monetary value, invested in business or other activities to make a profit or achieve another useful effect (Kamchybekov et al., 2018). Investment attractiveness reflects the ability of agricultural organizations to arouse commercial or non-commercial interest from investors (Knight, 2003). The investment attractiveness of the AIC depends on various factors and instruments. It is also influenced by the specific characteristics of the industry. According to the analysis, the manufacturing industry is the most attractive industry in the current conditions of Kyrgyzstan. Simultaneously, some industries experience a lack of investment. In particular, agriculture is among the sectors with low investment activity (Table 2). As studies show, despite the trend of increasing investment in agricultural production, the share of investment in fixed capital in agriculture in the total amount of investment remains minuscule (less than 3%), even though the Kyrgyz Republic is an agricultural country. The agro-industrial complex of Kyrgyzstan is unattractive to investors. This is due to the lack of own funds of agricultural producers, the steady rise in prices for raw materials, and ineffective industry reform during the years of independence. Considerable investment in the development of the institution of farming is required to form an optimal structure of the national economy and increase jobs through the development of small and medium-sized businesses in the Kyrgyz Republic (Jodha, 1971). The implementation of the principles of recoupment and repayment of borrowed sources of financing is not ensured due to the traditionally unprofitable nature of agricultural production. We believe that one of the main reasons for the crisis state of the prevailing majority of agricultural entities is insufficient government support measures. Outdated technical base, technical and technological backwardness, and low level of innovation activity and personnel potential are the main reasons for the low competitiveness of agricultural enterprises (Basalaeva, 2017). Due to agricultural reforms in the Kyrgyz Republic, the available agricultural machinery fleet has sharply decreased, which was also one of the causes

Fig. 1 The structure of the agroindustrial complex of the Kyrgyz Republic. Source: Compiled by the authors based on Kamchybekov et al. (2018)

AIC

Industries serving the AIC (power industry, agricultural engineering, fuel and chemical industry, and construction industry)

Agriculture (crop, livestock, and fishery)

Industries processing agricultural raw materials (sugar, flour and cereals, fruits and vegetables, brewing, dairy, meat, and tobacco)

Problems of Increasing Investment Attractiveness of the Agro-industrial Complex of. . .

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2020

2021 13.60%

Agriculture, forestry, and fishing

19.20%

Industry

30%

0.00%

10.80% 5.00%

27.70%

Services (excluding trade)

Wholesale and retail trade, repair of cars and motorcycles

16.40%

Net taxes on products

8.30%

Construction

Services (excluding trade)

Wholesale and retail trade, repair of cars and motorcycles

18.30%

Industry

10.00%

Construction

14.70%

Agriculture, forestry, and fishing

17.50% 13.50%

Net taxes on products

10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Fig. 2 Production structure of GDP of the Kyrgyz Republic by economic activity in 2020–2021. Source: Compiled by the authors based on (National Statistical Committee of the Kyrgyz Republic, 2021b)

Table 1 Gross output of agriculture at actual prices (on farms of all categories) Indicators/years Gross output of agriculture, million soms Total In % to the previous year of them: Crop production, million soms The share in the gross output of agriculture, % Cattle breeding, million soms The share in the gross output of agriculture, %

2017 192,620.4

2018 203,234.9

2019 199,534.1

2020 214,845.3

2021 240,757.8

97,803.3 50.8 94,817.1 49.2

105.5 108,187.4 53.2 95,047.5 46.8

98.2 100,514.8 50.4 99,019.3 49.6

107.7 110,782.2 51.6 104,063.1 48.4

112.0 124,040.7 51.5 116,717.1 48.5

Source: Compiled by the authors based on Kamchybekov et al. (2018), National Statistical Committee of the Kyrgyz Republic (2021a)

of the crisis in the industry (Adukov, 2006). The problems mentioned above cause low competitiveness of agricultural products and a high level of import dependence on the domestic food market. Renovation and modernization of agricultural production to ensure sustainable development of the industry and increase its export potential require attracting investment in fixed capital (Dzhailov & Baimuratov, 2020). Investments can be made from internal and external sources (Bodie et al., 2004). Activation of internal sources of investment is impossible without improving the financial condition of agricultural organizations. It takes a certain amount of time. Therefore, the relevance of attracting external sources of investment increases. Under the conditions of political instability, aggravation of the economic crisis, and high level of corruption of the authorities, the rating of Kyrgyzstan of the level of investment attractiveness falls from year to year. Attracting investment helps solve long-term and current problems, including those of the agro-industrial sector. Investments help overcome the crisis, increase budget

revenues, and improve the competitiveness of domestic products. To ensure investors’ confidence, it is necessary to improve the investment climate in the country, which requires improving the regulatory framework, providing certain benefits and guarantees to agricultural producers. Thus, the key problems of the AIC of Kyrgyzstan include insufficient government support and regulation of the industry, lack of funding, low level of production capacity and technical equipment, the unattractiveness of the industry for investors, the negative impact of geopolitical factors, tax burden, etc. (Umarov, 2020). An important factor in the development of the AIC is the investment attractiveness of the industry and the investment activity of agro-industrial enterprises. In turn, factors of investment activity can be considered at the level of the enterprises, the region, and the country (Knight, 2003). Thus, the investment activity of enterprises is determined by the technical and technological level of the enterprise, the presence and implementation of the development strategy of investment and innovation activities, the competitiveness of enterprise products, the level of staffing, and the stability

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Table 2 Dynamics of the volume of investments in fixed capital by type of economic activity for 2017–2021, million soms

Total Agriculture, forestry, and fisheries Mining Manufacturing industries Supply of electricity, gas, steam, and conditioned air Water supply, purification, waste treatment, and recycling Construction Wholesale and retail trade; repair of motor vehicles and motorcycles Transport activities and storage of goods Activities of hotels and restaurants Information and communication Financial intermediation and insurance Transactions with real estate Professional, scientific, and technical activities Administrative and support activities Public administration and defense; compulsory social security Education Health and social services Arts, entertainment, and recreation Other service activities

2017 145,226.9 1252.00 2923.0 8077.50 24,616.50 2088.10 2.80 4810.10

2018 151,467.9 3054.60 24,982.7 10,166.1 10,272.1 1818.3 0.30 7307.8

2019 162,193.7 3183.30 31,643.9 7863.3 6693.9 5292.2 29.40 10,303.3

2020 123,279.6 2350.10 30,064.7 3469.5 6011.8 1697.0 17.50 7031.7

2021 75,371.2 2210.5 24,850.3 2274.10 7443.10 2085.90 – 5572.60

2021 to 2017, % 51.9 176.5 850 28.1 30.2 99.9 – 115.8

18,255.10 2261.00 3672.60 66.60 1957.80 2479.70 86.10 287.40

20,758.7 4004.7 3214.4 219.30 3584.5 3273.1 309.50 142.70

18,919.9 6800.9 5850.9 49.00 3690.2 605.30 130.80 909.20

10,274.2 1793.6 3654.9 14.30 3097.6 295.60 – 242.00

12,483.3 1880.10 3363.20 0.70 2258.90 899.70 – 380.40

68.4 83.1 91.6 1.0 115.4 36.3 – 132.3

4434.3 1343.0 3375.2 1886.80

2680.5 2034.6 1820.1 851.10

2919.40 1568.70 1125.60 718.60

74.3 52.1 51.2 45.3

3929.30 3010.60 2197.10 1585.70

3306.7 3092.9 2494.2 1455.1

Source: Compiled by the authors based on National Statistical Committee of the Kyrgyz Republic (2021a, 2021b)

of the financial condition. Investment attractiveness at the regional level depends on geographical location, natural and climatic factors, development of regional infrastructure, the level of competition or monopolization of the industry, and other factors. The factors of the state level are the degree of development of market mechanisms, the state of investment infrastructure of the country, state regulation, tax regime, customs and tariff regime, and the involvement of the AIC in the integration processes (Chin, 2016).

3

Results

According to the research results, we can conclude that improving the efficiency of economic entities of the AIC and the industry as a whole and ensuring sustainable development of agricultural producers requires improving the system of government regulation and support. The main activities of government bodies to enhance the investment activities of agro-industrial organizations are as follows: 1) Improving the conditions for investment in agro-industrial production and increasing its investment attractiveness; 2) Increasing funds for the development of agricultural science in the context of innovative development; 3) Improving the structure of agricultural production through direct and indirect participation of the government in the investment activities of agricultural producers,

improvement of rural infrastructure, and development of co-financing principles; 4) Allocation of funds on a competitive basis for innovative products; 5) Ensuring the protection of the interests of agricultural producers and investors.

4

Conclusion

In conclusion, we note that the improvement of the system of state regulation and support of the agricultural sector of the economy is very important for the development and improvement of the effectiveness of organizations of the AIC; it is necessary to have a clear scenario for its further development. Only an increase in state support can create incentives to invest in the industry and, as a result, increase the level of self-sufficiency in food in the country and, consequently, its food security.

References Adukov, R. (2006). Quality of state management as a factor of evaluation of forecasts and development in the AIC. AIC: Economics, Management, 6, 23–25. Basalaeva, I. P. (2017). Food security in the region of concord. In M. G. Pugacheva & V. P. Zharkov (Eds.), Russia’s ways. War and peace:

Problems of Increasing Investment Attractiveness of the Agro-industrial Complex of. . . A collection of articles (pp. 147–162). Moscow School of Social and Economic Sciences, RANEPA. Bodie, Z., Kane, A., & Marcus, A. J. (2004). Essentials of investments. Williams. (Original work published 1992). Chin, G. T. (2016). Asian Infrastructure Investment Bank: Governance innovation and prospects. Global Governance: A Review of Multilateralism and International Organizations, 22(1), 11–25. https:// doi.org/10.1163/19426720-02201002 Dzhailov, D. S., & Baimuratov, A. A. (2020). Investment as one of the factors of developing agriculture sectors in conditions transformation of economy of the Kyrgyz Republic. Proceedings of the IssykKul Forum of Accountants and Auditors of Central Asia, 2(29), 32–37. Haidar, J. I. (2012). Impact of business regulatory reforms on economic growth. Journal of the Japanese and International Economies, 26(3), 285–307. https://doi.org/10.1016/j.jjie.2012.05.004 Jodha, N. S. (1971). Land-based credit policies and investment prospects for small farmers. Economic and Political Weekly, 6(39), A143–A148.

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Kamchybekov, T. K., Atyshov, K., & Bakas, U. B. (2018). Economy of the Kyrgyz Republic. Publishers Printing House of the Private Entrepreneur Duishebaev B. S. Knight, F. H. (2003). Risk, uncertainty and profit (M. Ya. Kazhdan, Trans. from English; V. G. Grebennikov Ed.). Delo. (Original work published 1921). National Statistical Committee of the Kyrgyz Republic. (2021a). Agriculture of the Kyrgyz Republic: Annual publication, 2021. . Accessed August 29, 2022, from http://www.stat.kg/media/ publicationarchive/46d32930-6f06-4c1c-97f5-fb8611be639a.doc National Statistical Committee of the Kyrgyz Republic. (2021b). Kyrgyzstan in Figures, 2021. Accessed August 29, 2022, from http://www.stat.kg/media/publicationarchive/2523a4b9-0a87-47968649-e0dc419ae7f0.rar Umarov, S. T. (2020). Competitive activity of production and sale of agricultural products of Kyrgyzstan in the context of international integration. Economics and Innovation Management, 2(13), 54–60. https://doi.org/10.26730/2587-5574-2020-2-54-60

The Impact of Sharp Fluctuations in Global Crude Petroleum Prices on the World Economy Maria V. Petrovskaya, Fakhraddin N. Akhmedov, Mhd Shaker Zeitoun, and Ahmad S. Al Humssi

Abstract

Sudden changes in global energy markets have a significant impact on the global economy. International crude petroleum prices are linked to many factors, a key one being the interaction of supply and demand forces in the global crude petroleum market, military processes in Iraq, Syria, Libya, and other countries, and global pandemic. Crude petroleum prices are closely related to the events and crises that countries are going through. The paper seeks to study these factors and the mechanism of their impact on global crude petroleum prices and the global economy. Based on the Granger causality test, the authors found that global crude oil prices determine global GDP in the short and long term, while global GDP has no impact on global oil prices. As a result, it is concluded that any global event or crisis can affect energy prices; the crises of 2008, 2014, 2020, and 2022 affected global crude petroleum prices. Keywords

Crude petroleum prices · Global economy · COVID-19 · Global energy markets · Global crises · Military process

JEL Codes

Q43 · E31 · O57

M. V. Petrovskaya (✉) · F. N. Akhmedov · M. S. Zeitoun Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia e-mail: [email protected] A. S. Al Humssi Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia Financial University under the Government of the Russian Federation, Moscow, Russia

1

Introduction

Crude petroleum is one of the most important energy sources and is the main engine of economic and life activities. Most factories use this type of fuel in production processes and as a means of heating. This source is linked to several factors, the most important of which is international crude petroleum prices, where prices can change daily and suddenly, and this is related to the demand and supply of this type of energy and other energy sources in addition to other factors, which affect on сrude petroleum prices include the following: • International and regional organizations such as OPEC (Loutia et al., 2016; Pierru et al., 2018) and OECD (Adekoya & Adebiyi, 2020); • Geopolitical conflicts and wars (El-Gamal & Jaffe, 2018), as in Iraq, Syria, Libya, and other countries (Andersen et al., 2022; Hendrix, 2017; Looney, 2003); • Economic and industrial growth and development factors affecting crude petroleum (Humbatova & Hajiyev, 2019). • Contributors to a complex market system, futures market contracts, and energy commodity market speculators (Brunetti et al., 2016; Bu, 2011); • Extraction, refining, and transportation costs (Gross et al., 2012); • The value of the dollar and other currencies (Al-Sahlawi, 2010). • Alternatives to extractive energy, such as permanent alternative energy, wind, sun, electricity, etc. (Karacan et al., 2021). One of the most important of these factors is the decisions of energy-importing and energy-exporting countries (Gyagri et al., 2017). In 2020, net crude petroleum (CP) exporters were as follows (CP exports exceed CP imports): (1) Saudi Arabia ($95.7 billion), (2) Russia ($74.4 billion), (3) the USA ($52.3

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_72

413

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billion), (4) Canada ($47.2 billion), and (5) Iraq ($45.2 billion) (Observatory of Economic Complexity (OEC), 2022). In 2020, the net crude petroleum importers were as follows (CP imports exceed CP exports): (1) China ($150 billion), (2) the USA ($75.1 billion), (3) India ($59 billion), (4) South Korea ($42.2 billion), and (5) Japan ($38.4 billion) (Observatory of Economic Complexity (OEC), 2022). Oil-exporting countries play an important role in determining the crude oil prices by reducing or increasing the volume of crude oil supply. In turn, importing countries can play a role in determining the crude oil prices by reducing or increasing the volume of demand for crude oil. However, the question arises whether changes in the world price of crude oil can affect the growth of the global economy. To determine the extent of the impact of the relationship between global crude oil prices and global economic growth, the authors must study the causal relationship between these variables reviewed in the framework of this research.

2

Methodology

Due to the importance of crude oil in the global economy, as global crude oil prices directly impact the global economy. Any sharp fluctuations in global crude petroleum prices will lead to a downturn and a slowdown in world economic growth. In this research, the authors seek to find the causal relationship between global crude petroleum prices and the global economy represented by global GDP using the Granger test based on the VAR method, with the help of a specialized statistical program Eviews.

3

Empirical Analysis and Results

One of the most important economic indicators that express the global economy as a whole is the global GDP [the gross domestic product of all countries (IMF, 2021; Statista, 2022)], which can take the following mathematical model: GGDP = GDP1 þ GDP2 þ GDP3 þ GDP 4 þ GDP 5 . . . . . . :: þ GDPn

ð1Þ

Since 1985, the growth curve of the global GDP has been increasing despite the occurrence of some crises that have affected the global GDP, including the global financial crisis (Akhmedov et al., 2021), the crisis of the collapse of crude petroleum prices in 2014–2015, and the COVID-19 crisis (Chaplyuk et al., 2021, 2022; Dennis, 2020; Mohapatra et al., 2020; Morgan et al., 2021; Petrovskaya et al., 2022). If we analyze changes in world crude petroleum prices in the period from 1985 to 2021 (World Bank, 2022), we can

see severe fluctuations in crude petroleum, for example, during the global financial crisis in 2008–2009, the crisis of 2014, and other crises. This has an impact on other energy prices, for example, natural gas prices (Macrotrends Platform, 2022), where it is noted that there are severe fluctuations in natural gas prices caused by several reasons, including global demand and supply and the disturbance in the prices of other energy alternatives. It is necessary to pass through several stages to study the relationship between fluctuations in world crude petroleum prices and global gross domestic product. The first stage is the stability of the time series of variables in our example, the global GDP and world crude petroleum prices. In other words, there is no unit root. Dickey and Fuller took an autoregressive higher-order process known as the augmented Dickey-Fuller (ADF) test (Dickey & Fuller, 1979). This test is represented as follows: ΔY t = δ0 þ δ1 Y t - 1t þ δ2 T þ

m i=1

ΔY t - 1 þ ut

ð2Þ

To study the Stationary of time series of global GDP & global oil prices by using the Engel-Granger methodology, the authors came to the following results (Table 1): According to Table 1, the time series of the variables are stationary at the first difference. In other words, after the cointegration of the Johansen test (Johansen, 1988, 1991, 1995), we note that the time series of variables are stationary to the same degree at the first difference. Conducting the subsequent test for the residual stationary of the mathematical model using the least-squares method, GlobGDP = B0 + B1 Crude PetroleumP + U, we get the following results (Fig. 1). One of the most important tests used to detect causal relationships between variables is the short-term Granger paired causality test. Using the Granger causality test, the authors find that crude petroleum prices cause an increase in global GDP in the short term: 1) Null hypothesis DOP does not Granger Cause DGDP Test Result F-Stat = 4.33 Pvalue = 0.018 > 0.05 → Reject the null hypothesis; 2) Null hypothesis DGDP does not Granger Cause DOP Test Result F-Stat = 1.39 Pvalue = 0.25 > 0.26 → Accept the null hypothesis Thus, global GDP does not affect world crude petroleum prices, while world crude petroleum prices determine global GDP in the short term. For the long-term, the following test should be performed using VAR Granger Causality/Block Exogeneity Wald Test. In VAR Lag Order Selection Criteria, the authors used HQ: Hannan-Quinn information criterion. After testing, the authors got the following results (Table 2).

The Impact of Sharp Fluctuations in Global Crude Petroleum Prices on the World Economy Table 1 Stationary test (OP, GDP) using augmented DickeyFuller test, developed by MacKinnon

415

Method: Least Squares Sample (adjusted): 1962–2021 Included observations: 60 after adjustments Dependent variable: D(GDP,2) Augmented Dickey-Fuller test statistics Critical test values: 1% level 5% level 10% level Dependent variable: D(OP,2) Augmented Dickey-Fuller test statistic Critical test values: 1% level 5% level 10% level

t-Statistic -5.602023

Prob.* 0.0000

-3.544063 -2.910860 -2.593090 -7.443140

0.0000

-3.544063 -2.910860 -2.593090

Source: Complied and calculated by the authors based on IMF (2021), Macrotrends Platform (2022), Observatory of Economic Complexity (OEC) (2022), Statista (2022), World Bank (2022) Note: *MacKinnon (1996) one-sided p-values

Fig. 1 Augmented Dickey-Fuller test statistic for residual of the mathematical model. Source: Complied and calculated by authors based on IMF (2021), Macrotrends Platform (2022), Observatory of Economic Complexity (OEC) (2022), Statista (2022), World Bank (2022)

5 4 3 2 1 0 –1 –2 –3 65

70

75

80

85

90

95

00

05

10

15

20

DGDP Residuals Test critical values:

Augmented DickeyFuller test statistic t-Statistic

-7.496787

Prob.*

0.0000

Based on data from Table 2, the authors built the following model (Eq. 3): DGDP = 1:337122 þ 0:17661 DOP–0:036271 Uð- 1Þ

ð3Þ

Thus, it can be said that world crude petroleum prices are the main engine of global GDP in the short and long term. This can be explained by the fact that the crude petroleum sector occupies a large proportion of the global economy. Therefore, any change in crude petroleum prices will lead to changes in the global economy (Musa et al., 2019; Ural, 2016), whether in the short or long term.

Variable

D(U(-1)

C

-1.11387

0.629732

1% level

5% level

10% level

Coefficient

-3.544063

-2.91086

-2.59309

Std. Error

0.134909

1.035111

t-Statistic

-7.496787

0.608372

Prob.

0

0.5453

4

Conclusion

Crude petroleum is the main engine of the global economy because the world uses it in production processes and transportation. Thus, in the event of any disturbance in this source, it will have an impact on the global economy. The causal analysis reveals the existence of a relationship between world crude petroleum prices and the global gross product in the short and long term. In other words, the crude petroleum sector plays an important role in global GDP. Therefore, any increase in crude petroleum prices will increase global GDP.

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Table 2 VAR Granger causality/block exogeneity Wald tests Sample: 1960–2021; Included observations: 59 1) Dependent variable: DGDP Excluded Chi-sq DOP 5.507404 All 5.507404 2) Dependent variable: DOP Excluded Chi-sq DGDP 2.185124 All 2.185124 3) Result: OP cause GDP, Model: DGDP = B0+B1DOP + U(-1) 4) Regression output Variable Coefficient C 1.337122 DOP 0.17661 U -0.036271 R-squared 0.678756 Adjusted R-squared 0.667678 S.E. of regression 1.367331 Sum squared resid. 108.4365 Log likelihood -104.1016 F-statistic 61.27397 Prob(F-statistic) 0.000000

Df 1 1

Prob. 0.0189 0.0189

Df 1 1

Prob. 0.1393 0.1393

Std. Error 0.175987 0.015954 0.012089 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criterion Durbin-Watson stat

t-Statistic 7.597844 11.07012 3.000214

Prob. 0.000 0.000 0.004 1.535574 2.371889 3.511529 3.615342 3.552214 1.157259

Source: Complied and calculated by authors based on data (IMF, 2021; Macrotrends Platform, 2022; Observatory of Economic Complexity (OEC), 2022; Statista, 2022; World Bank, 2022)

Crude petroleum prices are closely related to the prices of alternative sources of crude petroleum. Any change in the prices of alternative sources leaves direct effects on crude petroleum prices. Nevertheless, these sources cannot affect global crude petroleum prices in the near term. The research finds that a global event or crisis is greatly affected by energy prices. For example, crises that affected global crude petroleum prices include the following: • Military process in the Middle East and North Africa: such as in Iraq (since 1981), Syria (2011), Yemen (2015), Libya (2011), and other countries; • The global financial crisis (2008); • Oil price decline (2014); • The COVID-19 pandemics (2020); • Ukrainian crisis 2022. Acknowledgements This article was performed in a framework of initiative scientific research № 060609-0-000 “The effectiveness of assessing and forecasting the financial security of the national economy”. Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia.

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the impact of global financial crisis and forecast evaluation. International Journal of Energy Sector Management, 14(1), 126–147. https://doi.org/10.1108/IJESM-02-2019-0013 Akhmedov, F. N., Zeitoun, M. S., & Al Humssi, A. (2021). Financial engineering to optimize risk management in banks based on Interest Rate Swaps to better hedge the exposure to interest rate fluctuations the case of banks in Syria. International Review, 1–2, 99–107. https://doi.org/10.5937/intrev2102101A Al-Sahlawi, M. A. (2010). OIL price and the U.S. dollar: A survey of the empirical relationship estimates and alternative oil-pricing currencies. Journal of Energy and Development, 36(1/2), 45–62. Accessed May 7, 2022, from http://www.jstor.org/stable/24812748 Andersen, J. J., Nordvik, F. M., & Tesei, A. (2022). Oil price shocks and conflict escalation: Onshore versus offshore. Journal of Conflict Resolution, 66(2), 327–3 56. h ttps:// doi.org /10.1 177/ 00220027211042664 Brunetti, C., Büyükşahin, B., & Harris, J. H. (2016). Speculators, prices, and market volatility. Journal of Financial and Quantitative Analysis, 51(5), 1545–1574. Accessed May 6, 2022, from http://www. jstor.org/stable/44157831 Bu, H. (2011). Price dynamics and speculators in crude oil futures market. Systems Engineering Procedia, 2, 114–121. https://doi.org/ 10.1016/j.sepro.2011.10.014 Chaplyuk, V. Z., Akhmedov, F. N., Zeitoun, M. S., Abueva, M. M.-S., & Al Humssi, A. S. (2022). The impact of FDI on Algeria’s economic growth. In E. G. Popkova & B. S. Sergi (Eds.), Geo-economy of the future (pp. 285–295). Springer. https://doi.org/10.1007/978-3030-92303-7_32 Chaplyuk, V. Z., Alam, R. M. K., Abueva, M. M.-S., Hossain, M. N., & Al Humssi, S. A. (2021). COVID-19 and its impacts on global economic spheres. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 824–833). Springer. https://doi.org/10.1007/978-3-03069415-9_94

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International Production in the Russian Automotive Industry Siranush L. Usnyan

Abstract

Keywords

The paper aims to analyze the situation in foreign automobile production in Russia in the context of foreign policy restrictions, economic uncertainty, and the COVID-19 pandemic. The author used statistical data on the production of cars in Russia by local and global brands, decisions of the government and the President of Russia, and expert assessments. The research found that in 2020 the Russian market experienced the largest decline in car production over the past few years. Simultaneously, the decline in production was more significant than the decline in demand due to the impact of negative macroeconomic factors. The author concludes that foreign car manufacturers, despite the scale and great potential of the Russian market, are reducing their presence in it. As a result, there is a general decline in car production because the market share of Russian manufacturers is less than 50%. This trend of reducing production and the interest of foreign manufacturers in the Russian market was noted during the pandemic and confirmed by statistical data and expert assessments. In the current situation, it seems appropriate to reduce the level of localization to attract foreign automakers. However, due to the tightening of sanction restrictions, this seems unlikely on the part of European and American manufacturers. Simultaneously, Russia can expand cooperation with automotive companies from Southeast Asia and thereby neutralize the sanction restrictions. Measures to stimulate the domestic car market in the context of the exit from the COVID19 pandemic are unlikely to be effective. Therefore, it is necessary to focus on its natural recovery, especially considering the fact that in the short term, it will remain unattractive for foreign manufacturers.

Automotive industry · Car market · Car production · Industrial assembly · Localization of production in Russia

S. L. Usnyan (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

JEL Codes

63 · 23

1

Introduction

The COVID-19 pandemic, which covered almost all countries of the world, negatively affected various industries that were forced to go through lockdown and disruption of logistics and supply chains. The year 2020 has become a test for foreign car manufacturers in Russia and worldwide. Automaker Sollers (Mazda Sollers) suspended the production of cars from March 28 to April 5. Renault (Moscow plant), Toyota, Nissan, and Hyundai (Saint Petersburg plant) were also suspended. Against the background of the COVID19 crisis, Volkswagen production was stopped in Kaluga (Tiguan, Polo, and Skoda Rapid) and Nizhny Novgorod (Assembly of Skoda Octavia and Skoda Kodiaq). The Volvo truck plant in Kaluga also stopped production, which is the first time this has happened in Russia (INBC 24, 2020). The crisis related to COVID-19 has aggravated the systemic problems of regulation and the economy of foreign automobile production in Russia. Nowadays, Russia has faced new challenges and is operating under a system of serious sanction restrictions that negatively impact the development of the national automotive industry. Many global automotive brands represented in Russia have announced their possible withdrawal from the country. This is a logical basis for proposing a working hypothesis that the Russian automotive industry increasingly needs to

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_73

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develop its own production and become less dependent on foreign influence on the domestic market, which already manifested itself during the COVID-19 pandemic. The research focuses on the analysis of the situation in foreign automobile production in Russia in the context of foreign policy restrictions, economic uncertainty, and the COVID-19 pandemic.

2

Materials and Methods

The development of automotive production in the Russian Federation invariably attracts the attention of researchers. This is explained by the fact that the automotive industry plays an important role in the country’s economy, is one of its key sectors, and has a multiplier effect that affects the development of some other sectors of the economy (Zakrevskaya, 2020). Additionally, the Russian automotive market is one of the largest in Europe, with long-term growth potential (Shcherbakova, 2021). Simultaneously, the automotive industry in Russia is marked with systemic problems that do not allow national products to compete with foreign brands successfully (Sazhina & Slukina, 2022). Currently, the country has widely developed assembly facilities of well-known world companies. This rivalry is a catalyst for the re-equipment of Russian automotive production and the basis for finding a strategy and own ways for the development of the automotive industry (Zubkova, 2021). The research methodology is based on systemic-structural analysis of international car production, using groups of dialectical principles of knowledge social phenomena, including the principles of dialectics, the universal interconnectedness and the inseparability of the processes in the global economy, and the movement from the abstract to the particular, which allowed identifying systemically important segments of the international production of cars in Russia and revealing their dynamics. During the research of international automobile production in Russia, the author was methodologically guided by the basic principles of dialectics, which allowed analyzing the internal contradictions of the dynamics of foreign production in Russia and revealed the interdependence of its qualitative and quantitative changes. As a result, the author identified the stages and dynamic nature of general and particular mechanisms for forming contemporary (related to current crises) phenomena in the system of international automobile production in Russia. In preparing the research, the author applied specific scientific methods: comparison—which allowed the author to identify the essential content of forms of international penetration of automobile concerns in Russia. The author also relied on the principle of representative sample estimates,

thus singling out the sectors of automobile production and the market where the specifics of the formation of international automobile production in Russia are most clearly visible.

3

Results

Before the crisis of 2008–2010, Russian automotive production was about 80%, while joint production was about 20%, but their share was constantly growing. Russian analysts noted that the market for cars and trucks “is experiencing an unprecedented boom in Russia and the trend towards growth continues” (Stepenko, 2009). This boom has made the priority attention to product quality, which has stimulated the growth of demand for high-tech products from international manufacturers. For its part, the Russian government assumes that the automotive industry is one of the strategic growing ones in Russia, and it needs special attention from the state, manifested in the policy of localization of automobile production on the territory of Russia. Localization requirements have been increasing annually. Nowadays, the government requires engines and gearboxes to be manufactured in Russia. However, the necessary components, including cylinder blocks, heads, and pistons, are not produced in Russia, and it is impossible to establish their production of proper quality. For localization issues, it is critical who will create and develop automotive components—the car manufacturer or specialized companies. In the USSR, this was done by car factories. A car contains about 20 thousand items of materials, parts, and assemblies. Outside of international production chains, it is unrealistic to be at the level of global requirements for the parameters of all names. Even German, Japanese, Korean, and American companies do not produce their cars without each other. The cost of research, development, design, capacity building, and organization of production of a contemporary mid-price car is 2.5–3 billion euros. In Russia, no car manufacturers can solve this problem every 3 or 4 years. Moreover, no market can provide a return on these investments. Perhaps, there should be specialized manufacturers of automotive components in Russia that will work independently on the free market. Otherwise, the automaker is forced, as in the USSR, to buy outdated and not very high-quality components because it produces them at its own factory. In this situation, the government, insisting on deeper localization, should support the production of automotive components not by worsening the economic situation of some car manufacturers in favor of others but at the expense of the amounts received from scrap collection from direct imports, excise duty on passenger transport, transport tax,

International Production in the Russian Automotive Industry

and other budget revenues generated by motor transport. It is necessary to pay subsidies to manufacturers of components to make them cheaper, as well as to buyers of cars. These proposals were formulated by a working group under the Ministry of Industry and Trade of the Russian Federation, which proposed additional subsidies for high localization (Nikitina, 2019). Foreign automakers in Russia seek to deepen localization because it is economically feasible and justified and not because it is ordered from above. Deeper localization should be considered in the context of integration into global production chains. Even before the COVID-19 pandemic, Western experts pointed out that the decline in the Russian automobile market occurred despite the great advertising and marketing activity of car manufacturers. Thus, the industry can do little to increase sales without active support from the Russian government (Cordell, 2020). In the pandemic, 12 automakers in Russia were included in the Russian government’s list of strategic enterprises, i.e., those that play a vital role in the economy. They are provided with preferential loans for working capital replenishment. Additionally, the government decided to purchase an additional 1200 reanimation ambulance cars for regional medical institutions for 5.2 billion rubles. At a meeting on the development of the automotive industry on April 24, 2020, the President of the Russian Federation instructed to organize operational work to remove administrative barriers, including in the car market, so that it is possible to purchase a car remotely. The President also ordered to allocate 2.5 billion rubles to car-sharing companies and provide them with preferential leasing mechanisms. In addition to the purchase of reanimation ambulance cars, another 5 billion rubles were allocated for the purchase of ambulances. The President believed that such an order would help stimulate the demand and support automakers. However, according to the President, “first of all, it is important now for people,” meaning, probably, industry workers. The President also supported the proposal to develop a set of solutions to increase the demand for cars from the state and companies with state participation by taking inventory of national projects in terms of purchasing vehicles and implementing them ahead of schedule. Additionally, the President noted the need to work out a mechanism for providing loans to replenish working capital for industry enterprises (Ministry of Industry and Trade of the Russian Federation, 2020). From the President’s decisions and instructions, it is unclear whether these measures will affect foreign manufacturers. Nevertheless, it is apparent that the structural issues of the industry and localization are not considered.

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The issue of industrial subsidies remained controversial. The decision of the (previous) government to differentiate them actually meant redistributing the money earned by some automakers in favor of others, which is expected to lead to the closure of a number of industries, for example, Avtotor and its related companies, as well as Russian enterprises Volvo, Scapia, Peugeot, Citroen, Toyota, Mazda, and Mitsubishi. “Industrial subsidies” are not charity from the budget but rather the redistribution of the fee paid by enterprises for the future disposal of each car. The so-called “industrial subsidies” are then paid these funds. The amount of subsidies cannot exceed the total amount of the previously paid scrap collection. When signing the special investment contract (SPIC), producers and the government assumed mutual obligations: one to invest large amounts, the other—to maintain the current conditions, which will allow each manufacturer to implement its own investment program. The Russian government did not have time to implement one policy in the form of increasing waste collection and signing SPIC with manufacturers because it began to adjust it, making it dependent on the localization of critical technologies. Earlier in the SPIC, each manufacturer set a deadline for achieving certain parameters in its investment program; now, it is proposed to set a certain intermediate finish for everyone. In this difficult situation, foreign car manufacturers in Russia are trying to maintain production volumes. According to the Federal State Statistics Service of the Russian Federation, in 2019, 1.72 million units of various automotive equipment were produced in the Russian Federation. As of the first quarter of 2020, more than 235,000 passenger cars were produced in Russia by foreign automakers. However, 75% of light commercial vehicle (LCV) production and almost 80% of truck production were carried out by national brands (Statista, 2022). In recent years, the production of automotive equipment in Russia has grown steadily. Nevertheless, it did not reach the highest volumes in 2012, when the production of passenger cars alone amounted to 1.97 million units, with 1.33 million (67.5%) produced by foreign companies and 0.64 million cars of Russian brands (32.5%) (Fomin, 2016). There were no significant changes in the production structure compared to 2018. As before, about half (47.1%) of all cars are produced by Avtovaz (20.5%), Hyundai Motor Manufacturing Rus (14.2%), and Avtotor (12.4%). The producer group had a share in the range of 5–9%. These are Volkswagen group Rus, GAZ, LADA Izhevsk, and Renault Russia. In turn, Toyota Motor and Nissan manufacturing Rus had 4.3% and 3%, respectively, while the share of UAZ, PSMA Rus, and KAMAZ fluctuated in the range of 2–2.5%. Other manufacturers had a smaller share. The interest of global automakers in developing their business in Russia in the face of unfavorable foreign policy

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conditions, economic uncertainty, and the recession associated with the COVID-19 pandemic remains low. American giant Ford closed its businesses in Russia in mid-2019 after sales of its vehicles fell by 57% (Cordell, 2020). The largest Russian automaker, Avtovaz, announced the purchase of General Motors’ share from their joint venture that produces cars in Russia under the Chevrolet brand, which effectively put an end to GM’s presence in the field of car assembly (Stolyarov & Marrow, 2019). At the end of May 2020, Nissan management decided that the Datsun brand would leave the Russian market (Nikitina, 2020). For 2020–2023, the company plans to reduce the number of brands in its portfolio. Datsun was built based on Lada models at Avtovaz facilities. Additionally, Nissan has a plant in St. Petersburg that can produce up to 100 thousand cars (Qashqai, X-Trail, and Murano). In 2019, the plant reduced production by 7.4%, to 52.3 thousand cars. The Qashqai crossover accounted for most of the production; its output increased by 3%, to 27.3 thousand cars. The company is also assembling a Terrano crossover in Moscow along with a co-platform Renault Duster. Officially, the company refers to the optimization of the brand line (Nikitina & Shcherbakov, 2020). Nissan’s decision on Datsun attracted the attention of experts as an indicator of the state of international automobile production in Russia, as well as the prospects for the development of the Russian car market. It should also be noted that the production of the problematic brand was located in Russia, which seems to be erroneous. Prices for Datsun in Russia are such that they do not interfere with sales of Nissan or Renault, as well as new Lada models. At the same time, combining Datsun and Nissan under the same brand was probably a mistake, recalling the experience of Renault, which, in contrast to Europe, assembled and sold in Russia the Dacia Logan, Duster, and Sandero models as Renault, which changed the brand’s positioning in the Russian market as a low-budget. For the Russian market, it did not make sense to combine the brands because the Russians percept Nissan as a more expensive brand, and this perception is stable. The decision of the Nissan concern to abandon the production of the budget Datsun brand in Russia will most likely not affect the loading of the Avtovaz plant in Togliatti, where they are produced. According to Reuters, Datsun absorbs Nissan sales in some markets. However, in Russia, this brand competes only with Lada models and is assembled on its platform. If the brand collapses, Avtovaz will replace its sales with its own models. Analyzing the situation in 2019—the first half of 2020, we should conclude that the situation for Nissan in Russia is not comfortable: sales are steadily falling, and market participants are talking about a short model line, in the expansion of which Nissan is not ready to invest.

S. L. Usnyan

By optimizing the situation in medium and small markets, Nissan is preparing to significantly reduce capacity to increase sales in the USA and China (Norihiko, 2019). As part of the “recovery plan,” the Japanese carmaker intends to move sharply away from the strategy set by the former head of the Renault-Nissan-Mitsubishi Alliance, Carlos Ghosn, and provides for a massive expansion of the business. Nissan plans to focus on the American and Chinese markets. In the USA, the plan is to refuse to increase market share by selling cars to fleets, including rentals, at large discounts, which affects the profitability and image of the concern. There are no grounds for expanding the international presence in Russia yet. In 2019, 90.3 million new cars were sold worldwide, with 60% in China, the USA, Japan, Germany, and India. In this row, Russia took 12th place in 2019 and 5th place in Europe. This is 1.76 million cars sold (-2.3% by 2018). These indicators are insufficient for full capacity utilization of plants already operating in Russia. In this regard, there is no question of deploying additional capacity. Additionally, statistics show that auto loan approval rates fell from 51% to 44% in 2019. Thus, the tightening of credit regulations designed to cool the borrowing market has begun to impact the automotive market (Cordell, 2020). Against this background, in April 2020, car brands produced in Russia increased their product prices (Analytical portal “Cena-Auto” [Price-Auto], n.d.). As a result, despite all measures taken by the government, according to the Analytical agency “Autostat” (2021), a decrease in the number of cars produced was noted in Russia during 2018–2019. Nevertheless, the decline in the indicator in 2020 turned out to be the most significant in recent times (Fig. 1). As follows from the analysis of the above data, the reduction in car production in 2020 compared to the previous year amounted to 284,836 (about 17%). Thus, the crisis situation provided an opportunity to adjust the main approaches to regulating foreign automobile production in Russia, in its bad times, but this was not done.

4

Conclusion

International production in the automotive industry in Russia has a long history associated with the cooperation of Soviet factories GAZ, VAZ, and others with foreign partners. In the 1990s, with the economy’s transition to the market, the interest of world car manufacturers in Russia increased significantly. In the 2000s, it became a rapidly growing sector of the Russian economy, outstripping the production of national brands. Simultaneously, being influenced by global trends in the development of the world economy and industry, as well

International Production in the Russian Automotive Industry Fig. 1 Car production in Russia in 2018–2020. Source: Compiled by the authors based on Analytical agency “Autostat” (2021)

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1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Car production per year, pieces

as the corresponding risks, the international production of cars in Russia depends on them to the same extent as on the state of the domestic market. In recent years, there has been a tendency to reduce the interest of world car manufacturers in production in Russia due to the narrowing of the Russian domestic market, unfavorable production conditions for foreign manufacturers, the global crisis processes, and the COVID-19 pandemic. Solving the problems of industry regulation, within the framework of increasing the percentage of localization, the Russian authorities encourage the development of related industries in Russia. Simultaneously, the level of localization reaches the limits beyond which the technological backwardness of the Russian economy manifests itself, in which it is impossible to produce components of the required quality. Foreign automakers operating in Russia agree to deepen economically feasible localization. Nevertheless, they are critical of the directive, in fact, planned indicators given by the authorities. For the current level of technology, it is apparent that instead of deepening localization, it is more appropriate to integrate Russian automobile production into global production chains. In the context of the pandemic, global automobile production inevitably experiences a decline, and its fate largely depends on state support measures. In Russia, they have only affected public procurement of new cars, without affecting the reform of institutions for the development of the industry, for example, the widely discussed industrial levy. As a result of the analysis, we can talk about the formation of a number of trends that can determine the place of foreign manufacturers in the Russian automotive market in the strategic future: there exists a trend of declining interest in car production in Russia:

2018

2019

2020

1,770,545

1,723,376

1,438,540

• The need for the development of specialized manufacturers of automotive components in Russia that would work independently in a free market; • The desire of foreign automakers working in Russia to deepen economically feasible localization and not the one that is ordered from above, while such a deepening is possible only in the context of organic integration into global production chains; • Measures to support the industry only affected the areas of public procurement of new cars and not the reform of institutions for the development of the industry, especially those that cause the most discussion: industrial collection, etc. From the President’s decisions and instructions, it is not clear whether the measures taken will affect foreign manufacturers; • The decline in car production and the narrowing of the Russian market that make it unattractive for foreign manufacturers. In the current situation, it seems appropriate to reduce the level of localization to attract foreign automakers. Nevertheless, this seems unlikely on the part of European and American manufacturers due to the tightening of sanction restrictions. Simultaneously, Russia has the opportunity to expand cooperation with automotive companies from Southeast Asia and thereby neutralize the sanction restrictions. Measures to stimulate the domestic car market in the context of the exit from the pandemic are unlikely to be effective. Therefore, it is necessary to focus on its natural recovery and consider the fact that it will remain unattractive for foreign manufacturers in the short term.

References • The narrowness and significant shortcomings of the Russian state measures taken to stimulate industry, especially regarding recycling collection and containment that put foreign producers at a disadvantage; • The unreality of high localization rates for foreign manufacturers, especially in the high-tech part of components;

Analytical portal “Cena-Auto” [Price-Auto]. (n.d.). Official website. Accessed May 2, 2022, from https://cena-auto.ru/ Autostat. (2021). Automotive industry in Russia. Results of 2020, prospects. Accessed May 2, 2022, from https://www.autostat.ru/ research/product/396/ Cordell, J. (2020, January 15). Russian auto market stalls sales of new cars dip. Carmakers expect bumpy road ahead. The Moscow Times.

424 Accessed May 2, 2022, from https://www.themoscowtimes.com/ 2020/01/15/russian-auto-market-stalls-a68905 Fomin, I. F. (2016). Opportunity of development Russian automobile industry in conditions of instability foreign-economic cooperation. Administrative Consulting, 11(95), 186–197. INBC 24. (2020). Carmakers halting production in Russia. Accessed May 2, 2022, from https://www.inbc24plus.com/carmakers-haltingproduction-in-russia Ministry of Industry and Trade of the Russian Federation. (2020, April 24). Meeting on the development of the automotive industry. Accessed May 2, 2022, from http://minpromtorg.gov.ru/presscentre/news/#!vladimir_putin_provel_soveshhanie_po_voprosam_ razvitiya_avtomobilnoy_promyshlennosti Nikitina, O. (2019, October 8). Import of high charges. Ministry of industry and trade encourages localization of car production. Kommersant. Accessed May 2, 2022, from https://www. kommersant.ru/doc/4117937 Nikitina, O. (2020, May 28). The Datsun brand is leaving the Russian market. Kommersant. Accessed May 2, 2022, from https://www. kommersant.ru/doc/4358224 Nikitina, O., & Shcherbakov, V. (2020, March 19). This is expected to lead to the closure of all production facilities of Avtotor. Kommersant. Accessed May 2, 2022, from https://www. kommersant.ru/doc/4292682 Norihiko, S. (2019, October 23). Datsun brand set to go as Nissan rolls back Ghosn’s expansionist strategy. Reuters. Accessed May 2, 2022, from https://www.reuters.com/article/us-autoshow-tokyo-nissan-

S. L. Usnyan exclusive/exclusive-datsun-brand-set-to-go-as-nissan-rolls-backghosns-expansionist-strategy-sources-idUSKBN1X20NE Sazhina, D. A., & Slukina, P. A. (2022). Analysis of competition in the automobile manufacture in Russia. In Russian regions in the focus of change: Collection of reports of the XVI International Conference (pp. 320–329). Shcherbakova, D. V. (2021). Dynamics of demand and supply in the Russian Automobile Market. Global Scientific Potential, 4(121), 308–311. Statista. (2022). Breakdown of passenger car production in Russia in Q1 2020 by manufacturer type and origin. Accessed May 2, 2022, from https://www.statista.com/statistics/1045286/russia-distribu tion-of-car-production-by-type-and-origin/#statisticContainer Stepenko, M. G. (2009). Problem of localization in the Russian automotive industry. Tatishchev Volga State University Bulletin, 16, 434–445. Stolyarov, G., & Marrow, A. (2019, December 9). General Motors pulls out of Russian car assembly business with Avtovaz deal. Reuters. Accessed May 2, 2022, from https://www.reuters.com/article/usgm-russia-avtovaz/general-motors-pulls-out-of-russian-car-assem bly-business-with-avtovaz-deal-idUSKBN1YD12Z Zakrevskaya, Y. A. (2020). Russian automotive industry at the present stage. Education and Law, 7, 178–185. Zubkova, O. V. (2021). State support measures aimed at increasing the production efficiency and competitiveness of vehicles. In E. P. Parlyuk & N. N. Pulyaev (Eds.), Readings of Academician V.N. Boltinsky (pp. 152–161).

Regression Analysis of the Development Indicators of Light Industry in Kyrgyzstan Abdurashit G. Nizamiev, Zharkynai T. Shermatova, Zhannat K. Rayimberdieva, Elmurat A. Obdunov, and Rasuljon I. Mamajanov

Abstract

Keywords

The paper aims to determine the trends and prospects for the development of the light industry, which is one of the priority sectors of the economy of Kyrgyzstan, based on a comparative dynamic and correlation-regression analysis of the main indicators of the industry over the past 7 years. The paper uses such statistical research methods as dynamic analysis of time series, comparison method, and correlation and regression analysis to determine the nature of the change in the impact of light industry production volumes on the volume of gross domestic production of the light industry using the STATTECH program (according to the National Statistical Committee of the Kyrgyz Republic). The research object is the light industry of the Kyrgyz Republic. According to the research results, it was found that the correlation coefficient (r) of the light industry production volumes and the volume of the gross domestic product of the light industry is 0.948. Therefore, the relationship between the studied indicators is direct, and the tightness (strength) of the relationship on the Chaddock scale is very high. The number of degrees of freedom (r) is 3, Student’s t-test is 5.154. Based on the calculated correlation coefficient of determination, which affects the growth of GDP, the authors developed proposals for the development of the light industry of the Kyrgyz Republic. The research reveals the trends in the development of the light industry of the Kyrgyz Republic and carries out a regression analysis of the indicators of the development of the light industry of the Kyrgyz Republic in recent years.

Light industry · Dynamic analysis · Correlation analysis · Regression analysis · Student’s t-test · Determination coefficient

A. G. Nizamiev (✉) · Z. T. Shermatova · Z. K. Rayimberdieva · E. A. Obdunov Osh State University, Osh, Kyrgyzstan R. I. Mamajanov Samarkand State University, Samarkand, Uzbekistan e-mail: [email protected]

JEL Codes

L16 · L52 · E27

1

Introduction

The light industry is one of the three leaders in terms of exports (first place—gold, second place—agricultural products). It has significant importance in Kyrgyzstan’s state budget revenues and in solving social problems. One in five Kyrgyzstani citizens works in the sewing sector. Kyrgyzstan has the potential to develop the light industry. The country has real conditions for restoration and creation of competitive textile, garment, and footwear enterprises, wool and leather processing enterprises, and enterprises producing wool and leather products based on domestic raw materials. Active integration of the country into international economic associations creates real opportunities to increase exports of light industry products to world markets (Government of the Kyrgyz Republic, 2020). Consequently, the study of problems of the development of the light industry is of particular importance in the conditions of today’s Kyrgyzstan. Simultaneously, light industry products occupy about 3% of the manufacturing industry. About a third of light industry enterprises operate in the shadow sector (Rhythm of Eurasia, 2019). We believe that the urgent problems of the industry, the solution of which would bring it out of the crisis, include the following:

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_74

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1. Lagging behind the light industry in terms of technical and technological equipment; high indicators of material, energy, and labor intensity; 2. Fierce competition between local and foreign producers; 3. Large imports of raw materials and supplies; 4. Weak innovation and investment activity of enterprises in the industry; 5. Low human resources capacity (Batyrbekova, 2017; Kulueva & Rayimberdieva, 2021; Rayimberdieva, 2018). Further development of the industry requires scientific research and science-based proposals based on an in-depth analysis of the current state of the industry and assessment of its development prospects. The research aims to work out measures for developing the light industry in Kyrgyzstan. To achieve this goal, the task was set to study the degree of influence of the volume of production of light industry products on the volume of gross domestic output of the light industry using methods of correlation and regression analysis.

2

Methodology

During the research, to study changes in the volume of production of the light industry, gross domestic production of light industry, and the impact of various factors, the authors used statistical methods such as dynamic analysis of time series, averages, and correlation and regression analysis.

The main sub-branches of Kyrgyzstan’s light industry are textiles, clothing, leather, leather goods, and footwear. In 2019, the production volumes of these sub-industries were 1491.9 million soms (18%), 6502.6 million soms (79%), and 264.7 million soms (3%), respectively. Simultaneously, 80% of light industry products are clothing products (RussianKyrgyz Development Fund, n.d.). In 2020, due to the COVID-19 pandemic and the subsequent lockdown, the production of the light industry decreased by 21.5% compared to the previous year, including textile products by 9.5%, apparel products by 24.0%, and leather, leather goods, and footwear by 24.7% (Fig. 1) (National Statistical Committee of the Kyrgyz Republic, 2020). From 2014 to 2019 (2014 = 100%), light industry output declined until 2016; then, there was a gradual increase in output. The main reason for such production dynamics can be attributed to the accession of the Kyrgyz Republic to the Eurasian Economic Union (EAEU) in 2015. However, light industry enterprises go through a period of adaptation to the changed conditions for quite a long time, while food industry enterprises have managed to reorient and resume production quickly. As noted above, the COVID-19 pandemic has taken a huge toll on the garment industry. Thus, during the lockdown period in Bishkek, only 15–17 shops out of more than 1000 were functioning (National Statistical Committee of the Kyrgyz Republic, 2020).

140

118.2 111.4

120

115.8 118.6

100

77.8

80

93.1

100.3 86.7 78.5

60 40 20

0

2016

2017

2018 compared to the previous year

2019

2020

2015=100

Fig. 1 Indexes of physical volume of the light industry in the Kyrgyz Republic for 2016–2020 (%). Source: Compiled by the authors based on National Statistical Committee of the Kyrgyz Republic (2020)

Regression Analysis of the Development Indicators of Light Industry in Kyrgyzstan

We conducted a comparative analysis of the dynamics of light industry production in Kyrgyzstan for 2014–2020, the results of which are summarized in Table 1. Overall, over the reviewed period, production volumes in the industry increased by 48%. According to the method proposed by G. L. Gromyko (2005), we determine the average indicators of the industry. Thus, the average annual level of production of the light industry for the analyzed period was as follows: yi =

Σyi 51163:8 = = 7309:1 n 7

This means that the light industry of the Kyrgyz Republic annually produces products worth an average of 7309.1 million soms. According to Table 1, the average level of absolute growth is also calculated using the simple arithmetic mean formula: yi =

Σyi 2537:6 = = 362:5 n 7

Consequently, industry production volume increased annually on average by 362.5 million soms. The average growth rate based on the chain growth rate is calculated using the following geometric mean formula: p p 7 K = n K 1 ∙ K 2 ∙ K 3 ∙ . . . ∙ K n = 1:0530 = 1:0262 or 102.6%, i.e., the average annual growth rate of production in the light industry for 7 years was 102.6%. The average acceleration of production volumes was as follows: ΔK c = K c - 100 = 102:8 - 100 = þ 2:8% To study the relationship between the volume of production of the light industry and the GDP of the light industry, we

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performed a correlation analysis according to the methodology (Gromyko, 2005), the results of which are shown in Table 2. As a result of the analysis, using the STATTECH program, the authors obtained the following data: the correlation coefficient of light industry output and light industry GDP (r) is 0.948. Hence, the examined indicators have a direct relationship, and the strength of the relationship is high (on the Chaddock scale). The value of degrees of freedom (r) equals 3; Student’s t-test is 5.154 with a critical value equal to 3.182; if tobs > tcrit, then the dependence of the indicators is considered statistically significant (p = 0.035642). The following equation expresses paired linear regression: y = 1519:90148 þ 0:22379::x The analysis showed that the light industry’s production volume directly determines the light industry’s GDP and, therefore, affects the country’s GDP. Nowadays, there is a need to take proactive measures to smooth out the negative trends associated with the shutdown of production in the COVID-19 pandemic, increasing the competitiveness of the light industry of Kyrgyzstan in the conditions of active entry into economic integration associations. We believe that an important factor in the development of the national economy as a whole, and its industries, in particular, is the development and implementation of an effective investment policy for the country. The main directions of such a policy should be the following: • Activation of measures of state support of priority sectors of the economy, including the light industry; • Improving the institutional, legal, and economic environment; • Creating incentives for investment and innovation (Nizamiev & Osmonalieva, 2018a; Rayimberdieva, 2018).

Table 1 Dynamic analysis of the output of the light industry of the Kyrgyz Republic Production, mln. soms Absolute increases Δ, million soms, chain basic Growth rates, basic Growth rates, chain Growth rate % annual, chain by 2014 Absolute value, % growth, mln. soms

2014 5283.0

2015 5405.2

2016 6608.7

2017 6758.8

2018 9404.4

2019 9883.1

2020 7820.6

100.0

122.2 122.2 102.3 102.3 2.3

1203.5 1325.7 125.1 122.3 22.3

150.1 1475.8 128.0 102.3 2.3

2645.6 4221.4 178.0 139.1 39.1

478.7 4600.1 187.0 105.1 5.1

-2062.5 2537.6 148.0 79.1 -20.9

2.3 52.83

25.1 54.05

28.0 66.09

Source: Compiled by the authors based on National Statistical Committee of the Kyrgyz Republic (2020)

78.0 67.59

87.0 94.04

48.0 98.83

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Table 2 Correlation analysis of production volume of the light industry and GDP of the light industry, billion soms

No. 1. 2. 3. 4. 5.

Independent variable (x) 5405.2 6608.7 6758.8 9404.4 9883.1

Independent variable (y) 2642.36 2923.7 3256.0 3494.9 3800.0

Source: Calculated by the authors according to the method presented in Myrzaibraimov and Sopuev (2016)

An important factor in the development of the industry is an attractive investment policy, the availability of qualified personnel, and the presence of a high culture of production in the light industry. Attracting well-known light industry firms as investors is indicated as a priority task in the Program of Development of Light Industry of the Kyrgyz Republic for 2020–2023 (Government of the Kyrgyz Republic, 2020). Investments should be directed to those sectors for the development of which the country has opportunities, and there is demand for their products: the food and light industry, which provide employment and the demand for consumer goods (Nizamiev & Osmonalieva, 2018b). The development of the industry is also facilitated by coming out of the shadow sector, legalization of business, and the creation of conditions for increased exports of products.

3

Results

Based on the methods of statistical analysis and economicmathematical methods of research, the authors determined the trends and dynamics of the light industry according to the official statistics of the Kyrgyz Republic. The correlation coefficient of determination affecting the growth of the country’s GDP was calculated. Based on the analysis results, the authors worked out proposals for the development of the light industry.

4

Conclusion

Analysis of trends in the development of the light industry in the Kyrgyz Republic showed mixed development of the industry in the period from 2014 to 2021 and a relatively low share of the industry in the country’s GDP with its high economic and social importance. The correlation and regression analysis of the impact of light industry production

volumes on the volume of gross domestic output of the light industry using the STATTECH program showed a direct relationship between these indicators.

References Batyrbekova, Z. K. (2017). Problems and prospects of development of light industry of Kyrgyzstan. Economics. Management. Education, 2(5), 31–37. Government of the Kyrgyz Republic. (2020). Program of Development of Light Industry of the Kyrgyz Republic for 2020–2023. Accessed June 7, 2022, from https://www.gov.kg/files/news/froala/ a216df990bd66f5b443b2fd7b0de8dfc76ff4491.rar Gromyko, G. L. (2005). Theory of statistics: Textbook. INFRA-M. Kulueva, C. R., & Rayimberdieva, J. K. (2021). Stages of formation and development of light industry in the regions of Kyrgyzstan. Proceedings of the Issyk-Kul Forum of Accountants and Auditors of Central Asian Countries, 2(33), 257–264. Myrzaibraimov, R. M., & Sopuev, A. S. (2016). Recommendations for performing the calculation and analytical part of dissertations. Maximum. National Statistical Committee of the Kyrgyz Republic. (2020). On the development of industry in the Kyrgyz Republic in 2016–2020. Accessed June 6, 2022, from http://www.stat.kg/media/files/ 66900776-6e04-49d6-919f-06dd2511edbf.doc Nizamiev, A. G., & Osmonalieva, A. A. (2018a). Conditions and factors of formation of a favorable investment climate and their role in attracting direct investment in the national economy. Actual Issues of the Modern Economy, 6, 248–252. Nizamiev, A. G., & Osmonalieva, A. A. (2018b). Effective use of resources and activation of investment activity in the Kyrgyz Republic. Improvement of Accounting, Analysis, and Control as Mechanisms of Information Support for Sustainable Economic Development, 5, 29–35. Rayimberdieva, J. K. (2018). Light industry of Kyrgyzstan: Realities, problems, and development factors. Actual Issues of the Modern Economy, 9, 268–274. Rhythm of Eurasia. (2019, May 29). Kyrgyzstan’s light industry: An industry “sewn” with imported threads. Accessed June 7, 2022, from https://zen.yandex.ru/media/ritmeurasia/legprom-kirgiziiotrasl-shitaia-importnymi-nitkami-5cee4cabc64cb100ae6e3a5f Russian-Kyrgyz Development Fund. (n.d.). Light industry. Accessed June 4, 2022, from https://rkdf.org/ru/analitika/kratkie_otraslevye_ obzory/legkaya_promyshlennost

Development of the Competitiveness of Integrated Sectors of the Economy in the Market of Goods and Services Azizbek M. Tashbaev Osmonalieva

, Bektur S. Raimberdiev

, and Dinara A.

Abstract

Keywords

The paper aims to analyze the essence and content of the competitiveness of integrated sectors of the economy, the development of concepts of competition and competitiveness, and their role and importance in agricultural production on the example of goods, services, industries, enterprises, and administrative-territorial divisions. The authors studied, generalized, and systematized theoretical concepts of competitiveness of the integrated economy. Moreover, the authors defined the importance and role of strategic and tactical measures to improve competitiveness in terms of its integration with agriculture and other sectors of the economy. The reasons and factors influencing the process of development of competition and competitiveness of enterprises were revealed. Approaches to the concept of competition and competitiveness and its components are discussed in various aspects. The research results are the basis for developing proposals and recommendations to improve the manageability of competitive advantages of the integrated economy, which will improve the production culture and relations between producers and consumers. The authors clarified the definition of competitiveness based on the results of comprehensive research of the essence and content of the competitiveness of integrated sectors of the economy in the market of goods and services. The research results can be applied by enterprises of agriculture, food industry, and related industries in addressing the issues of achieving certain sustainable development and market competitiveness.

Integrated economy · Clusters · Competitiveness · Competition · Recycling · Agriculture

A. M. Tashbaev (✉) Osh Technological University named after M. M. Adyshev, Osh, Kyrgyzstan

JEL Codes

A13 · B12 · B41 · D04 · D21 · E65 · L60 · M21 · R11

1

Introduction

In market conditions, we have to consider the relationship of the agricultural sector with related industries and, above all, with processing, trade, and infrastructure industries, such as transport, logistics centers, storage processes, and market objects. This constitutes an integrated complex of production and marketing, in which agro-industrial production forms the core. On the other hand, the sequential and comprehensive consideration of economic problems of integrated systems is of the greatest interest because it allows us to trace reproductive processes and the circulation of income and resources, which unite households, markets for labor and resources, and production enterprises, as well as the connection of these structures with the state administration on taxation, the provision of services to each other, and organizations of mutually beneficial partnership. In a transitional economy, competition is the most critical factor in the development of industries, especially the agricultural sector. Increased competition among global agricultural producers for expanding markets further exacerbates the problem of competitiveness. The problem of competitiveness is particularly acute in Kyrgyzstan, where the share of agriculture and related industries in the structure of the national economy exceeds 14.7% (as of 2021).

B. S. Raimberdiev · D. A. Osmonalieva Osh State University, Osh, Kyrgyzstan # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_75

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Materials and Methods

The conceptual aspects of the concepts of competition and competitiveness are reflected in the studies of the classics of economic theory—A. Smith (2007) and M. Porter (2005). In the CIS countries, the improvement of competitiveness of the agro-industrial complex is discussed in the works of such scientists as G. L. Azoev (1996), U. K. Baimuratov (2008), M. Gelvanovsky (2007), K. A. Sagadiev (2003), I. G. Ushachev (2004), A. V. Voloshin and Yu. L. Aleksandrov (2017), and others. The issues of improving the competitiveness of agroindustrial production are reflected in various works (Abdiev, 2019; Aibashev, 2018; Asanova, 2011; Raimberdiev, 2017, 2018; Tashbaev & Raimberdiev, 2020; Toksobaeva, 2003) of Kyrgyz scientists. These studies investigate the following: • Problems of development and improvement of the competitiveness of the processing and food industry of the Kyrgyz Republic in the conditions of economic integration (Abdiev, 2019; Aibashev, 2018); • Factors of improving the quality and competitiveness of products (Asanova, 2011); • Competitiveness of integrated sectors of the economy in the market of goods and services and the main aspects of competitiveness of the Kyrgyz Republic in the EAEC conditions (Raimberdiev, 2017, 2018); • The impact of logistics centers on the competitiveness of goods producers (Tashbaev & Raimberdiev, 2020); • Methodological approaches to quality and competition (Toksobaeva, 2003). The publications mentioned above formed the theoretical and methodological framework of this research.

3

Results and Discussion

The Law of the Kyrgyz Republic “On Competition” defines competition as the free competition of business entities in the market when their independent actions limit the possibility of each of them to unilaterally influence the general conditions of circulation of goods in the relevant market and stimulate the production of goods required by consumers (Kyrgyz Republic, 2011). It has certain characteristics in space and time, the values of which are inherently variable. Therefore, the activities of various levels of management are characterized positively if the indicators of competitiveness are stable. However, this does not mean the constancy of market structures in the market because market situations and conjuncture are inherently volatile.

Consequently, those constantly searching for new and innovative solutions win. In this case, sustainability and stability should be understood as a constant search for the new and innovative in any field of activity. A. Smith made the first step to understanding competition as an effective means of price regulation and a factor regulating the combination of private and public interests, although he did not consider specific elements of the market mechanism (Smith, 2007). G. L. Azoev defines competition as a rivalry between separate legal or physical persons (competitors) who are interested in achieving the same goal (Azoev, 1996). In relation to the economy, K. A. Sagadiev characterizes this concept as a consequence of sustainable economic growth and progress in the economic, social, and environmental directions. He notes that competitiveness is understandable and measurable when applied to companies or industries, but it is very difficult to reason about the economy as a whole (Sagadiev, 2003). In our view, the above reasoning can be narrowed down to a certain framework if we consider the economies of individual territories or industries. M. Gelvanovsky defines a country’s competitiveness as the aggregate competitiveness of its goods, enterprises, and firms, noting that, in fact, the competitiveness of goods and firms is formed based on national socio-cultural and historical characteristics. In his opinion, competitiveness develops from macro to micro-level (Gelvanovsky, 2007). Simultaneously, the problems of economic competitiveness will grow immeasurably. Solving the problem of competitiveness on a national, regional, or individual company scale will become more challenging as the global economy interacts with local, regional, or individual economies; for example, the impact of international business, with its independence and ability to act in ways that a single independent country cannot always act. On the other hand, this poses the problem of constantly adjusting the economies of individual countries to the international challenges and demands of the global market. There are also measures that mitigate international needs by creating conditions in the production of goods and services that meet international requirements. One of these measures is the cluster approach to producing goods and services, which combines the production of products on the commonality of manufacturing technology, movement, and other features. The cluster approach to creating a competitive advantage in international trade contributes to the export of products. In a more generalized form, it is discussed by M. Porter, who interprets it as “a group of geographically adjacent interconnected companies and related organizations, operating in a particular area and characterized by a

Development of the Competitiveness of Integrated Sectors of the Economy in the. . . Fig. 1 Interaction of subjects of the market of raw agricultural materials. Source: Compiled by the authors

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Product

Product

Product

Producer

Processor

Trade

Conditions

Conditions

Conditions

commonality of activity, complementary to each other” (Porter, 2005). A cluster is created mainly in an integrated economy when enterprises can be classified in different sectors of the economy, which are technologically linked to each other to create value-added products. A classic example of the cluster approach can is agro-industrial products, the production and promotion of which involve agriculture, processing, infrastructure, and trade. These activities belong to different sectors of the economy. Nevertheless, they are all involved in creating, for example, finished food products for consumption by the population. Their activities are closely interconnected; some of them cannot function independently. Despite the different nature of agricultural and industrial processing, they are associated with creating value-added products containing the same elements. For example, raw agricultural materials are further processed industrially with new added value. At the same time, sales of products with a higher market value are important in the economic activity of agriculture and the food industry. In this regard, through processing raw agricultural materials, the food industry can create products with an added value many times exceeding the original value of raw agricultural materials. In our view, this is the peculiarity of the integrated economy and the characteristics that define it in the domestic and foreign markets. Another characteristic of contemporary integration is not only production and technological integration but also broad integration, such as production and infrastructure, trade infrastructure, production and trade, etc. Together, they constitute the national economic complex and, on the scale of individual territories, territorial-industrial, territorial-infrastructural, and other complexes. Among these complexes, a special place is occupied by agro-industrial complexes, which include at least four independently functioning sectors of the economy, such as agriculture, processing of raw agricultural materials, and infrastructure facilities for the movement of goods from producer to consumer, and trade. In turn, each of these sectors of the economy can be included in other complexes; for example, agriculture with mechanical engineering, which supplies agricultural machinery, or chemical industry, which supplies mineral fertilizers to agriculture, can form an independent complex. However, in terms of market success, any combination of different sectors of the economy can meet the market’s needs for certain products or services and ensure appropriate economic benefits.

Consumer

Therefore, it is important to have a rational combination of intersectoral ties and conclude contractual relations on the effective functioning of economic entities of different sectors of the economy. Along with this, territorial integration is critical in terms of effective use of the potential of the territories, their natural and climatic conditions, the accumulated experience of labor activity of the population, and others. Processing of raw agricultural materials in the form of crop and livestock products is, in fact, a continuation of production in the agricultural sector because the main content of the material components of industrial production is agricultural products. In other words, in processing, raw agricultural materials act as an object of labor, to which human labor is directed through the means of labor. An industrial enterprise for processing raw agricultural materials is characterized by its size, number of employees, production capacity (i.e., the ability to produce a volume per unit time), industry affiliation, location, corporate identity, and other attributes. The products released by the industrial enterprise will further pass a relatively difficult way of selling through numerous trade channels and come to the consumer. This process is depicted in Fig. 1. As can be seen from the above figure, processing occupies an intermediate position between agricultural producers and trade. Consequently, the reserves for increasing the competitiveness of food products should be sought in the food industry itself and in its relations with agriculture, trade, and consumers. The importance of agriculture and the agro-processing industry in the country’s south is particularly high. In the structure of the regional gross product of this strategically important region of the country, a special place belongs to the production of livestock and crop production. Currently, there are 21 food processing enterprises in the Osh Region and 20 in the city of Osh (National Statistical Committee of the Kyrgyz Republic, 2021). These enterprises are engaged in processing and manufacturing food products from various agricultural raw materials (meat, milk, grain, fruits and vegetables, potatoes, etc.). In these conditions, it is primarily necessary to study, at least in outline, the state of competition, its level, and its intensity within the framework of advantages and disadvantages of competitors operating in the market. Unfortunately, as the analysis results showed, out of 41 enterprises of the region and the city, 5 enterprises (Zheti-Baatyr, Osh-Sut, Fruit and Vegetable Plant, etc.)

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conducted a superficial analysis of the competitive advantages of their competitors. This is partly due to the fact that most of the processing companies in the region have a monopolistic position, which creates a non-competitive advantage. In our opinion, this perception is erroneous because competitors can equally be enterprises producing similar products in a given region or enterprises from other regions and countries. After all, they are consumed by the same customers. Simultaneously, collecting information about competitors from other regions or foreign competitors presents certain difficulties due to the lack and inaccessibility of statistical materials. Thus, there remain limited options to improve the competitiveness of goods. One of these options is to rely on intuition about the market situation; another way is to produce a product that differs in quality characteristics from the products of competitors for the better. Simultaneously, the production of products that can win the favor of customers in terms of appearance, taste, price, etc. requires the modernization of the enterprise, the introduction of innovations, and considerable funding, which, as our analytical data showed, enterprises do not have. One of the ways to move towards competitiveness is a gradual and consistent modernization of the enterprise. Not the least of these is the combined efforts of those interested in such modernization. The interested persons can be the representatives of other profiles, i.e., not only food industry workers. Then, based on the potential capabilities of the stakeholders, a collective idea must be developed to move the proposed project forward. This is the way entrepreneurs worldwide operate. Entrepreneurial activity in agro-industrial production does not have to be large, requiring huge and usually inaccessible funds. Only the government or large investors interested in doing business in Kyrgyzstan can do that. Food products are of the highest priority because we are talking about human nutrition. Simultaneously, the variety of products and their countless number makes the problem solvable if we run a business in parts or even manufacture a single product (e.g., making cheese, cottage cheese, cakes, yogurt, curut, baked goods, etc.). The priority, in this case, is the product’s quality and the ability to meet customers’ requirements in terms of volume and timing of consumption. After all, in many Western countries, a significant portion of food is made in small businesses, which is convenient for consumers and producers. It is convenient for consumers because the facilities of such small businesses are usually located nearby, and they operate at any time of the day. Consequently, for the city of Osh and the Osh Region, it would be advisable to at least develop lists of names of such

A. M. Tashbaev et al.

products and explore the possibility of their production in the region. It is useful to adopt the experience of neighboring Uzbekistan and Tajikistan in this area, which, in our opinion, have been somewhat successful in this matter. They even buy raw materials from Kyrgyzstan (such as fruits and vegetables, raw milk, and meat) and then supply Kyrgyzstan with finished food products (cheese, sour cream, yogurt, cottage cheese, etc.). The situation with introducing new technologies and product renewal at existing processing enterprises is somewhat more complicated due to outdated equipment, backward logistics, insufficient qualification of specialists, and the inability of managers to organize production that meets contemporary requirements. Unfortunately, the food industry remains unattractive for investment, especially for large-scale transformations. In this case, the problem is the same as with small businesses. Is it necessary to wait for an attractive investment environment to be created? In this case, we may miss out on the possibility of taking advantage of potential opportunities in producing raw agricultural materials. After all, it is known that only up to 15% of raw agricultural materials are subject to processing, and the rest is sold chaotically at various market sites. Deepening processing and expanding its base are only possible in well-equipped production bases using advanced and high technology, which requires funds, specialists, and organizational talents. Unfortunately, many industrialists think that they will step up modernization in the direction of competitive products if sufficient capital investment is available. However, this is not the case in reality. In particular, in Osh and the Osh Region, 30 enterprises in the food industry do not even have basic plans to modernize the enterprise, not to mention real projects that would provide for joint activities with foreign enterprises. This direction is new in the practice of the region because there are no impressive examples of joint production with foreign firms of competitive products. In our opinion, to revitalize this work, just as in the case of small businesses, it is necessary to focus efforts on finding the most viable projects and ideas and attracting investors. We believe that there will be investors even from far abroad— from European, Arab, and Asian countries. For example, in the Ala-Buka district of the Jalal-Abad Region, one of the ayil okmotus signed a long-term cooperation agreement to grow plums and process them locally with subsequent delivery to Germany. Germany undertakes to finance a closed cycle of work, including all processes from growing raw materials to sending the finished processed products to Germany. The contract also specifies such details as the

Development of the Competitiveness of Integrated Sectors of the Economy in the. . .

application of a particular brand of fertilizer to the soil, specifying the dosage and timing. In addition to its economic benefit, such responsibility brings an even more important benefit, namely, instilling responsibility in workers, a love for a particular activity, and a culture of communication and cooperation on an international scale. With the globalization of the economy and the expansion of economic ties, such measures also contribute to the development of the economy. The introduction of new technologies in the food industry enterprises of the region is also required in the manufacture of new products from goat meat, lamb, etc. Nowadays, the meat of the above animals is consumed, as in ancient times, in unprocessed form. More than 40 processed products are made from milk in Mongolia. The conditions in Kyrgyzstan and Mongolia are largely identical, and the people’s lifestyles are similar. Therefore, the task is not to make animal products but to create demand for them through advertising, the Internet, etc. It seems to us that such work is rarely carried out in the region. Hence, there is a need to create demand for the region’s food industry products through the supply of new types of products. Thus, in the southern region, most of the population has not yet learned how to make delicious delicacies from the meat and fat of horse meat (chuchuk, kazy, kart, and others), which can be consumed on hiking or trips to mountainous areas, especially in the wintertime. Such products can be exported to other countries. After all, this gap can be filled by learning from the people of Naryn or Issyk-Kul. In the same line is the manufacture of products from mushrooms grown at home. In Kyrgyzstan, the technology of growing mushrooms has been mastered but is not yet widespread in all regions. This refers to agricultural and industrial activities and serves as a major help in replenishing the country’s food supply. Another requirement for recycling is its harmony with medicine (for human health) and veterinary medicine (for animal safety). Even though there are various supervisory bodies to ensure proper communication with medicine, the technological standards of manufacturing products are often violated. As a result, these products do not reach their shelf life. This is especially true for canned foods, including those made at home for sale.

4

Conclusion

The competitiveness of an integrated economy is a complex construct consisting of the multifaceted qualitative, quantitative, target, and many other characteristics. Given that competitive products are created as a result of the integration of

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different spheres of activity, in addition to the food industry, it should include agriculture that supplies raw materials, infrastructure sectors that carry out transportation and storage, and market facilities involved in the marketing of products. As the main directions of increasing the competitiveness of agro-industrial production, the paper proposes the measures for: • The establishment of close cooperative ties of agriculture with processing and other areas; • The study of effective ways of transporting products to consumers and market objects; • Market research on the market situation to identify market conditions. The competitiveness of agro-industrial production largely depends on the organization of the output in domestic and foreign markets. This is especially relevant in the context of integrating the economy of the republic at the current stage of economic globalization and the entry of the republic into various economic unions (WTO, EAEU, SCO, etc.).

References Abdiev, M. Zh. (2019). Improving the competitiveness of the food industry of the Kyrgyz Republic in the context of economic integration. Synopsis of Dissertation of Doctor of Economics, Bishkek, Kyrgyzstan. Aibashev, M. Zh. (2018). Problems of development and increasing the competitiveness of the processing industry (on the example of the Kyrgyz Republic). Synopsis of Dissertation of Doctor of Economics, Bishkek, Kyrgyzstan. Asanova, A. A. (2011). Factors of improvement of quality and competitiveness of goods. In Materials of the international scientificpractical conference “Actual problems of taxes, the budget, and the system of training of economic personnel” (pp. 233–236). Azoev, G. L. (1996). Competition: Analysis, strategy, and practice. Center for Economics and Marketing. Baimuratov, U. K. (2008). Problems of competitiveness of the national economy in the context of global trends. In Competitiveness: Theory, methodology, and practice (pp. 66–73). Gelvanovsky, M. (2007). The role and boundaries of competition in solving the problems of increasing the competitiveness of the national economy. Modern Competition, 4(4), 22–27. Kyrgyz Republic. (2011). Law “On competition” (22 July 2011 No. 116). Bishkek, Kyrgyzstan. Accessed June 20, 2022, from http://cbd.minjust.gov.kg/act/view/ru-ru/203356 National Statistical Committee of the Kyrgyz Republic. (2021). Industry of the Kyrgyz Republic 2016-2020. Bishkek, Kyrgyzstan. Porter, M. (2005). On competition. Williams Publishing. (Original work published 1998). Raimberdiev, B. S. (2017). Competitiveness of integrated sectors of the economy in the market of goods and services. Contemporary Humanitarian Studies, 6(79), 25–27. Raimberdiev, B. S. (2018). The main aspects of the competitiveness of the Kyrgyz Republic in the EAEU. Questions of Economic Sciences, 3(91), 43–46.

434 Sagadiev, K. A. (2003). Problems of national economic competitiveness. In M. B. Kenzheguzin (Ed.), Problems of sustainable development in the context of globalization (Vol. 1, pp. 89–93). Smith, A. (2007). An inquiry into the nature and causes of the wealth of nations. Eksmo. (Original work published 1776). Tashbaev, A. M., & Raimberdiev, B. S. (2020). Influence of logistics centers on the competitiveness of producers. Economy and Business: Theory and Practice, 2-2(60), 134–137. https://doi.org/10.24411/ 2411-0450-2020-10143

A. M. Tashbaev et al. Toksobaeva, B. A. (2003). Methodological approaches to quality and competitiveness. Reform, 3, 70–72. Ushachev, I. G. (2004). On the problem of food security of the CIS member states. Agro-industrial Complex of the CIS: Current Status and Prospects, 1, 31–32. Voloshin, A. V., & Aleksandrov, Y. L. (2017). The evolution of theories of competition and competitiveness in economic science. Fundamental Research, 4-2, 330–338.

Research on the Behavior of Online Consumers in the Global Internet Space Elizaveta E. Tarasova , Elena I. Makrinova , Elena V. Matuzenko , Irina V. Rozdolskaya , and Lyubov V. Teplova

Abstract

JEL Codes

The paper focuses on consumer behavior in the digital environment. The authors emphasize that with the digital transformation of the economy and the COVID-19 pandemic, retail and wholesale trade is seamlessly moving from offline to online. This creates a portrait of the new online consumer, with their preferences and peculiarities of the choice of goods on the Internet. To define the portrait of the online consumer and study its characteristics, the authors consider the dynamics of the audience of Internet users in the world and Russia, the share of consumers logging into the Internet from different devices, the time spent by users per day in the Internet and in social networks, the use of different digital platforms for access to the Internet, and the dynamics of the number of active users of social media. The authors pay special attention to the development of e-commerce in the world: the share of Internet users who have made online purchases is shown, and the product categories in demand among online shoppers are considered. The research proposed and systematized the main indicators for assessing the effectiveness of an advertising campaign in the digital environment. Using the proposed indicators will help identify areas of improvement with online consumers in the global Internet space, identifying their needs and increasing their loyalty. The conclusions and results obtained by the authors can be used in any business to improve its efficiency.

M00 · M3 · M31

Keywords

Online consumers · Online platforms · Online shopping · Internet space · Social media · Digitalization E. E. Tarasova (✉) · E. I. Makrinova · E. V. Matuzenko · I. V. Rozdolskaya · L. V. Teplova Belgorod University of Cooperation, Economics and Law, Belgorod, Russia e-mail: [email protected]; [email protected]; zav-kaf-gtskr@bukep. ru; [email protected]; [email protected]

1

Introduction

Many scientists have noted that the digitalization of society and the COVID-19 pandemic have significantly affected all areas of the economy—changing the behavior model of the target audience of the Internet and the very portrait of online consumers (Arshad et al., 2018; Cavaliere, 2018; Doyle, 2002; Isaenko et al., 2020; Makrinova et al., 2020a, 2020b, 2021; Neumann, 2018; Orel, 2018; Polozhentseva et al., 2019; Tarasova & Isaenko, 2021; Teplov et al., 2016). The last 2 years have seen an increasing trend in the number of Internet users worldwide and in Russia; the number of online purchases on various digital platforms is also increasing (Bodnar et al., 2020; Dunnett, 1987; Jain, 1999; Maslova et al., 2020; Matuzenko et al., 2021a, 2021b; Saevets, 2019; Tarasova et al., 2021). Given the above, there is a need to study the portrait of the target audience of online consumers to use this information in business.

2

Methods

During the analysis, the authors applied desk research methods: analysis of scientific and methodological literature on the studied topic and generalization and classification of scientific research and existing foreign and Russian experience of studying the behavior of online consumers on the Internet. During the study of this problem, the authors used a systemic approach and comparative analysis, which allowed determining and analyzing the behavior of the target audience of the Internet in the world and in Russia.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_76

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436

3

E. E. Tarasova et al.

Results

According to the digital agency “WebCanape,” the number of people worldwide has increased by 154 million over the past 3 years. By 2020, this indicator was to reach 7830 million people (Table 1). The share of mobile subscribers over 3 years remained almost the same as in 2018—66.7% in 2020. The number of Internet users in the world has increased significantly. In 2020, there were 4660 million Internet users, which is 272 million more than in 2018. Over the analyzed period, the number of social media audience tends to grow. In 2020, its share of the world’s population was 53.6%, which is 8.2% higher than in 2018. Over 3 years, the share of the audience of social networks from the number of Internet users increased by 10.7–90.1% in 2020. Almost all indicators of Internet development in Russia are trending upwards, except for the number of mobile subscribers. Thus, in 2020, their number decreased by 19.6 million people compared to 2018. As can be seen from Table 1, the number of cell phone subscribers in Russia exceeds the number of residents of the country because many Internet users have several SIM cards. During the analyzed period, there has been an increase in the number of Internet users: in 2020, there were 124 million people in Russia, which is 15 million people more than in 2018. A similar situation is observed in the audience of social networks: in 2020, its share from the number of Russian residents increased by 19.3%. In 2020, the share of the audience of social networks from the number of Internet

users in Russia was 79.8%, which is 15.9% more than in 2018. Various devices are used to access the Internet: cell phones, desktop computers, laptops, tablets, etc. (Fig. 1). Cell phones (50.6% and 55.7% in 2018 and 2020, respectively) and desktop computers and laptops (45.5% and 41.4% in 2018 and 2020, respectively) account for the largest share. The share of desktop computers and laptops slightly decreased over the observed period (by 4.4%). There is a difference in the time users spend on the Internet according to the world’s countries. Thus, the residents of such countries as the Philippines, Brazil, Thailand, Colombia, Indonesia, South Africa, Argentina, Malaysia, and Mexico spend the most time online. In turn, the residents of Switzerland, the Netherlands, France, Germany, and Japan spend the least time online. During the analyzed period, almost all countries showed a trend of increasing time spent by users on the Internet, except Thailand, the UAE, India, and China. The time users spend on social networks is usually three times less than the time they spend on the Internet. Users use different platforms to access the Internet. Internet users spend most of their time on the following platforms: YouTube (21.1 hours a day), VK (16.51 hours a day), Reddit (16.51 hours a day), and Yandex (11.06 hours a day). Moreover, users spent less time on YouTube in 2020 than in 2018 (by 26 min). Users spend the least amount of time using Wikipedia. The number of active Internet users in the world differs by social networks. For example, the social network Facebook has the most significant number of users, with 2740 million

Table 1 The dynamics of Internet users in the world and in Russia, millions of people No. Indicators Internet development indicators in the world 1. Population 2. Number of mobile subscribers 3. in % of the population 4. Number of Internet audience 5. in % of the population 6. Number of social media audience 7. in % of the population 8. Share of the audience of social networks from the number of Internet users, % Internet development indicators in Russia 9. Population 10. Number of mobile subscribers 11. in % of the population 12. Number of Internet audience 13. in % of the population 14. Number of social media audience 15. in % of the population 16. Share of the audience of social networks from the number of Internet users, % Source: Compiled by the authors based on Sergeeva (2019, 2020, 2021)

Years 2018

2019

2020

Growth rate, % 2019/2018 2020/2019

7676 5112 66.6 4388 57.2 3484 45.4 79.4

7750 5190 67.0 4540 58.6 3800 49.0 83.7

7830 5220 66.7 4660 59.5 4200 53.6 90.1

101.0 101.5 – 103.5 – 109.0 – –

101.0 100.6 – 102.6 – 110.5 – –

143.9 248.2 172.5 109.6 76.2 70.0 48.6 63.9

145.9 237.6 162.9 118.0 80.9 70.0 48.0 59.3

145.9 228.6 156.7 124.0 85.0 99.0 67.9 79.8

101.4 95.7 – 107.7 – 100.0 – –

100.0 96.2 – 105.1 – 141.4 – –

Research on the Behavior of Online Consumers in the Global Internet Space Cell phones

120 100

Сomputers and laptops

437 Tablets

0.15 3.75

0.1 2.7

0.1 2.8

45.5

44

41.4

50.6

53.2

55.7

2018

2019

2020

80

Other devices

60 40 20 0

Fig. 1 Accessing the Internet in the world from various devices, %. Source: Compiled by the authors based on Sergeeva (2019, 2020, 2021)

users in 2020, which is 469 million higher than in 2018. The social network YouTube is second in terms of the number of users: in 2020, the platform had 2291 million people, which is 391 million more than in 2018. WhatsApp took third place: in 2020, it had 2000 million people, which is more than 500 million higher than in 2018. The least popular social networks are Twitter and Pinterest. During the analyzed period, all social networks and messengers (except Facebook Messenger) tended to increase the number of users. The percentage of Internet users who have made online purchases is shown in Table 2. Thailand, Indonesia, and Malaysia had the highest number of online consumers. Moreover, the proportion of such Internet users over 3 years is growing. Thus, in 2020, this indicator increased by 3.6% in Thailand, by 1% in Indonesia, and by 7% in Malaysia (compared to 2018). South Africans have the lowest proportion of Internet users who have made online purchases: only 57.7% in 2020 (2.7% higher than in 2018). During the analyzed period, the share of Russian Internet users who made online purchases increased. In 2018, this indicator equaled 58%. In 2020, this indicator increased by 2%. On the contrary, residents of the UAE reduced the number of online purchases during the analyzed period. Thus, the share of online purchases was 68% in 2018 and 67.2% in 2020. The analyzed period saw a change in online spending of customers by product categories (Fig. 2). In 2019, online consumers spent the most money on traveling, $1190 million. However, due to the COVID-19 pandemic, these costs almost halved in 2020. Currently, the most popular product category is fashion and beauty. While $524.9 million was spent in 2018, $140.7 million more was spent in 2020. Consumers’ spending on “Electronics” and “Hobbies and toys” product groups increased in 2020 (1.3 and 1.4 times compared to 2018, respectively).

In 2020, online consumers doubled their online food ordering (compared to 2018). Music is purchased least of all online. Nevertheless, spending in this category almost doubled over the analyzed period and amounted to $21.71 million in 2020. Due to the increasing role of Internet technologies in promoting products and services, there is an urgent problem of improving the evaluation of the effectiveness of advertising in the digital environment. The authors propose and systematize the main indicators for assessing the effectiveness of an advertising campaign in the digital environment. 1. CRR (Channel Reach Rate):

CRR =

1D - Reach=Posts
100%, Subscribers

ð1Þ

where: ∑1D - Reach—the amount of coverage in a day; Posts—the number of posts; Subscribers—the number of subscribers.

2. PRR (Post Reach Rate):

PRR =

1D - Reach
100%, Subscribers

ð2Þ

where: 1D - Reach—the amount of coverage of the post in a day.

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E. E. Tarasova et al.

Table 2 Dynamics of the share of Internet users who made online purchases, by country, % Years No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

Country Philippines Brazil Thailand Colombia Indonesia South Africa Argentina Malaysia Mexico UAE India Turkey Singapore Saudi Arabia Vietnam Portugal USA Russia Italy Poland Sweden New Zealand Ireland China Canada Spain North Korea Australia Austria Belgium Switzerland Netherlands France Germany Japan

2018 70 68 80 56 86 55 62 75 65 68 74 67 73 64 77 59 77 58 75 76 73 70 72 82 66 72 79 69 79 68 71 72 71 81 68

2019 76 70 82 60 88 56 64 82 67 66 74 63 74 73 75 65 76 60 77 82 74 72 78 78 68 74 80 70 78 69 76 73 73 82 69

2020 80.2 76 83.6 67.1 87.1 57.7 72.5 82.9 76.4 67.2 76.7 75 79.7 77.4 78.7 69.1 80.9 60.0 79.7 82.5 73.7 70.9 78.4 77.4 73.6 79.3 79.7 74.9 81.3 74.8 74.5 76.2 74.4 81.6 73.7

Growth rate, % 2019/ 2020/ 2018 2019 108.6 105.5 102.9 108.6 102.5 102.0 107.1 111.7 102.3 98.9 101.8 103.0 103.2 113.3 109.3 101.2 103.1 114.0 97.1 101.8 100.0 103.6 94.0 119.0 101.4 107.7 114.1 106.0 97.4 104.9 110.2 106.3 98.7 106.4 103.4 100.0 103.5 102.7 107.9 100.6 101.4 99.6 102.9 98.5 108.3 100.5 95.1 99.2 103.0 108.2 102.8 107.2 101.3 99.6 101.4 107.0 98.7 104.2 101.5 108.4 107.0 98.0 101.4 104.4 102.8 101.9 101.2 99.5 101.5 106.8

CCI =

Mentions þ Reposts
100%, Posts

ð5Þ

where: Mentions—mentions; Reposts—reposts; Posts—the number of publications in the channel.

6. ADR (Average Daily Reach):

ADR =

S : Days
100%, Subscribers

ð6Þ

where: Days—the number of days since publication. 7. DAR (Daily Audience Rate):

DAR =

S 1 - S2
100%, Subscribers

ð7Þ

where:

ð3Þ

where: ∑S- total count readings of all posts for a certain period. 4. GPR (Gross Post Rating):

ð4Þ

5. CCI (Channel Citation Index):

3. GCR (Gross Channel Rating):

S
100%, Subscribers

S
100%, Subscribers

where: S—count score for a particular publication.

Source: Compiled by the authors based on Sergeeva (2019, 2020, 2021)

GCR =

GPR =

S1—count score for a particular day; S2—count score for a previous day. The use of the proposed indicators to assess the effectiveness of advertising campaigns in the digital environment to promote products and services will help identify areas of improvement with online consumers in the global Internet space, identifying their needs and increasing their loyalty.

4

Conclusion

During the analyzed period, the number of Internet users has increased, with greater use of cell phones, desktop computers, and laptops. The amount of time users spend

Research on the Behavior of Online Consumers in the Global Internet Space 135.8 83.15 70.56

Video games

2020

2019

439

2018

21.71 13.59 12.05

Online music

Hobbies, toys

383.2 386.2

525.6

330.9 316.7 272.5

Furniture

Foods

413.8

168.8 209.5

501.8 456.9 392.6

Electronics

593.6

Traveling

1190

750.7 Fashion and beauty 524.9 0

200

400

600

665.6 620.1 800

1000

1200

1400

Fig. 2 The amount of online spending by product category worldwide, $ million. Source Compiled by the authors based on Sergeeva (2019, 2020, 2021)

online daily has increased in most countries. The most visited digital platforms in the world are Facebook, YouTube, and WhatsApp. Over 3 years, almost all countries have seen an increasing trend in online shopping (except the UAE). The most popular product categories when ordering online are: “Fashion and Beauty,” “Traveling,” and “Hobbies and toys.” Thus, due to the digitalization of society and the COVID19 pandemic, the number of Internet users has increased, and retail sales have shifted from offline to online.

References Arshad, M., Ahmad, S., & Siddiqui, F. A. (2018). Social media technologies and their benefits in higher education institutions: A survey of Jazan University. Information Technology and Learning Tools, 65(3), 91–102. Bodnar, A., Brykalyk, E., & Sapelo, A. A. (2020). The impact of internet communications on competitive consumer behavior. Current Trends in the Development and Prospects for the Introduction of Innovative Technologies in Engineering, Education and the Economy, 6(1), 76–78. Cavaliere, F. (2018). Discursive mechanisms of news media – investigating attribution and attitudinal positioning. Russian Journal of Linguistics, 22(2), 338–356. https://doi.org/10.22363/2312-91822018-22-2-338-356 Doyle, P. (2002). Marketing management and strategy. Financial Times Prentice Hall. Dunnett, A. (1987). Understanding the market. Longman. Isaenko, E., Makrinova, E., Rozdolskaya, I., Matuzenko, E., & Bozhuk, S. (2020). Research of social media channels as a digital analytical and planning technology of advertising campaigns. IOP Conference

Series: Materials Science and Engineering, 986(1), 012014. https:// doi.org/10.1088/1757-899X/986/1/012014 Jain, S. C. (1999). Marketing planning and strategy. South-Western College Publishing. Makrinova, E. I., Matuzenko, E. V., Rozdolskaya, I. V., Odnoral, N. A., & Grigorieva, V. V. (2020a). Planning, implementing and evaluating the effectiveness of an advertising campaign in digital environment (through the example of telegram) (Proceedings of the RuDEcK 2020: Russian conference on digital economy and knowledge management) (pp. 206–211). Voronezh. https://doi.org/10. 2991/aebmr.k.200730.038 Makrinova, E. I., Matuzenko, E. V., Zaitseva, N. A., Larionova, A. A., Eliseeva, O. V., Mysova, O. S., et al. (2020b). Assessing methodology development for the service organizations advertising campaign effectiveness in audio blogs (podcasts). EurAsian Journal of BioSciences, 14(2), 3625–3632. Makrinova, E. I., Rozdolskaya, I. V., & Matuzenko, E. V. (2021). Research of the opportunities of business promotion on different internet platforms using technologies social media marketing. Fundamental Research, 2, 38–43. Maslova, T., Pletneva, N., Althonayan, A., Tarasova, E., & Krasnov, A. (2020). Transformation of consumer behavior in the tourism industry in the conditions of digital economy. IOP Conference Series: Materials Science and Engineering, 940(1), 012070. https://doi.org/10.1088/1757-899X/940/1/012070 Matuzenko, E. V., Glazunova, O. A., & Izvarin, A. A. (2021a). CRM systems as a key tool for increasing the efficiency of internet trade activities. Vestnik of the Belgorod University of Cooperation, Economics and Law, 4(89), 236–249. Matuzenko, E. V., Glazunova, O. A., & Izvarin, A. A. (2021b). Trends, problems and prospects for the development of electronic commerce in the sphere of internet trade. Vestnik of the Belgorod University of Cooperation, Economics and Law, 1(86), 197–206. Neumann, K. (2018). Digital economy: For the benefit of users, business and the state. Business Excellence, 2, 22–29. Orel, A. (2018). Social media analyzing for evaluation opinions determination based on sentiment analysis. International Scientific

440 Journal “Internauka”, 2(10), 36–43. https://doi.org/10.25313/25202057-2018-10-3858 Polozhentseva, I. V., Zaitseva, N. A., Larionova, A. A., Rodina, E. E., Sarantseva, E. G., Kudryavtsev, V. V., et al. (2019). Assessment of the main trends in the development of the tariff policy of telecommunications services of market operators. International Journal of Applied Exercise Physiology, 8(2.1), 440–447. Saevets, A. N. (2019). Internet consumer behavior. Management in Social and Economic Systems, 28, 85–86. Sergeeva, Yu. (2019, February 11). All Internet and social networking statistics for 2019 – figures and trends in the world and in Russia. Accessed July 5, 2022, from https://www.web-canape.ru/business/ vsya-statistika-interneta-na-2019-god-v-mire-i-v-rossii Sergeeva, Yu. (2020, February 3). All Internet and social networking statistics for 2020 – figures and trends in the world and in Russia. Accessed July 5, 2022, from https://www.web-canape.ru/business/ internet-2020-globalnaya-statistika-i-trendy

E. E. Tarasova et al. Sergeeva, Yu. (2021, February 2). All Internet and social networking statistics for 2021 – figures and trends in the world and in Russia. Accessed July 5, 2022, from https://www.web-canape.ru/business/ vsya-statistika-interneta-i-socsetej-na-2021-god-cifry-i-trendy-vmire-i-v-rossii Tarasova, E. E., & Isaenko, V. A. (2021). Study of a growth hacking digital marketing strategy implementation stages in a start-up. Vestnik of the Belgorod University of Cooperation, Economics and Law, 3(88), 198–208. Tarasova, E. E., Voronkov, A. V., & Naplekova, Y. A. (2021). Electronic commerce as a tool for retail trade development in the digital environment. Vestnik of the Belgorod University of Cooperation, Economics and Law, 3(88), 33–50. Teplov, V. I., Tarasova, E. E., Alyabieva, M. V., Isaenko, E. V., & Pidoimo, L. P. (2016). Business processes content of trade organizations and peculiarities of their management in market environment. International Review of Management and Marketing, 6(5), 8–15.

Creation of a SaaS-System for Image Analysis in Agriculture Using Artificial Intelligence Methods Aleksey F. Rogachev

, Ilya S. Belousov

Abstract

In various branches of agricultural production, including agriculture, some problems require the use of an intellectual approach. The authors develop a classification neural network, develop the server part of the application, as well as develop the user part of the application. The initial data set consists of 250 images, which is insufficient for highquality training of a neural network. The main result of the created service is the ability, within the framework of the website, to receive an image that represents the original snapshot of the field and the layer mask superimposed on it. The use of the ANN classification type has shown that neural networks can reliably solve the problems of reclamation recognition of the state of agricultural fields. Advanced information technologies allow transferring resource-intensive calculations to the computing cloud. Computing in the cloud will help more convenient scaling of computing power when changing the formulation of the problem of intelligent classification. It is economically feasible to monetize a cloud service as a SaaS system. Keywords

Agriculture · Image analysis · Artificial intelligence methods · SaaS-system

JEL Codes

C65 · C80 · C81 · C83 · C88 · C93 · Q12 · Q15

A. F. Rogachev (✉) · I. S. Belousov · E. V. Melikhova Volgograd State Agrarian University, Volgograd, Russia

1

, and Elena V. Melikhova

Introduction

Some problems require the use of an intellectual approach in various branches of agricultural production, including agriculture, crop production, and agricultural land reclamation. Various methods, models, tools, and technologies for assessing the economic efficiency of SaaS and decisionmaking support for choosing the method of its acquisition are considered in the monograph by K. N. Mitus et al. (2020). The mentioned monograph presents a SaaS in comparison with alternative options for its acquisition, as well as a decision support system (DSS) focused on the applied tasks of choosing the optimal way to purchase the software. In agriculture, various developments and studies of the use of artificial neural networks (ANN) are known in various branches of agricultural production: in crop production (artificial intelligence-controlled greenhouses, robots for harvesting, etc.), in land reclamation (processing satellite images of agricultural fields, soil conditions, agricultural landscapes, etc.), and animal husbandry. Artificial intelligence (AI) is used where the use of classical mathematical methods of decision support is not enough, but intellectual analogs of human cognitive abilities are required. Such an approach can solve even global problems—ensuring the food security of the Earth’s population, increasing the stability of yields by increasing the level of automation, revealing hidden patterns of crop formation, etc. Deep ANN is a kind of nonlinear mathematical model. The software or hardware implementation of ANN copies the structure and functioning of neural networks of biological organisms in terms of the interaction of many of their nerve cells. In a mathematical sense, each artificial neuron (AN) performs a nonlinear transformation of the vector X of the signals at the input to AN into the vector Y of the output using the so-called activation function. The ANN structure is formed by the following types of AN, combined into layers:

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_77

441

442

• Input (provide external information representing a set of values of input variables); • Output (provides the return of output variables—control or generated predictive signals) • Intermediate “hidden” layers of neurons that implement internal data transformation functions. Therefore, a deep ANN contains at least three functional layers. Starting from the second layer, including the output layer, neurons are informationally connected to all elements of the previous one. The increase in computer performance has led to the intensive development of the level and capabilities of ANN. In 2009, the computer giant IBM demonstrated a model of a cat’s brain, but its performance turned out to be 650 times slower than the natural brain (Ananthanarayanan et al., 2009). The basis of ANN application is the possibility of neural network training. The so-called “deep learning” uses a multilayered set of nonlinear filters that provide transformations at different levels of abstraction to extract the selected features. Approximately in the mid-2000s, the power of computers made it possible to train sufficiently large neural networks by organizing calculations on the GPU, and sufficiently large data sets were formed. Simultaneously, thanks to the publications of Hinton et al., an effective method of deep learning was proposed in the field of ANN theory, in which each layer of the network was trained separately using a limited Boltzmann machine, and then the backpropagation method was used (Deep learning, 2022). Groups of researchers from Microsoft, Intel, and Tencent (Wageningen University, the Netherlands) conducted experiments on growing cucumbers indoors in fully automated greenhouses with full AI control over production (Wageningen University & Research, 2018). The results were compared with those obtained by experienced agronomists as a control. The Microsoft group achieved higher results. Neural network technologies have found applications for the automation of robotic harvesting (e.g., strawberries). Nvidia robots are equipped with 3D cameras, with the help of which berries are isolated in the image using AI based on convolutional neural networks (CNN). Special algorithms evaluate the degree of fruit maturity. Then the robot, using an automatic “manipulator arm,” cuts the ripe fruits and removes them from the bush. It should be noted that solutions based on traditional computer vision methods did not give the result achieved thanks to convolutional neural networks. Since training such networks using a central processing unit (CPU) requires additional computing resources, Nvidia developers use powerful additional technical solutions Jetson TX1/TX2. The authors of the publication note (itmanager85,

A. F. Rogachev et al.

2021) that “robotization reduces the cost of final products and that, in particular, agriculture will completely change in the near future, thanks to such high technologies.” In 2018, researchers from the Sydney State University published an article (Padarian et al., 2019) on the results of humus assessment using deep neural network algorithms. The purpose of the study was to simplify soil mapping using CNN. The training was conducted on a small sample collected manually from the soil data of Chile. The neural network approach used showed fewer errors than the others. As positive aspects of the published work, the authors note the ability to consider the correlation of depths, the flexible architecture used in CNN, and the possibility of explicitly obtaining spatial information (Padarian et al., 2019). Microsoft engineers are working with ICRISAT scientists to use AI to determine the optimal landing time in India (Onbillion, 2017). The application using Microsoft Cortana Intelligence Suite also allows evaluating the soil condition for which it recommends the required fertilizers. The program involved 175 farmers from 7 different villages. They started sowing after receiving a recommendation SMS notification. As a result, the harvest exceeded the traditional one by 30–40%. ANN can also be used to solve other tasks in agricultural production. Within the crop production framework, neural networks can solve problems of recognizing weeds and diseased plants. When training and using ANN, it is very important to collect, form, and mark up training and test samples that are input data. Various issues of designing and using subject-oriented databases in agricultural production sectors, including agriculture, were considered by L. A. Zinchenko, V. M. Kureychik, V. G. Redko, and other scientists (Zinchenko et al., 2011).

2

Methods and Materials

The research aims to develop a cloud service on a classifying neural network. The study in the article is carried out in the context of the following tasks: 1. To develop a classification neural network; 2. To develop the server part of the application; 3. To develop the user part of the application. The initial data set consists of 250 images, which is insufficient for high-quality training of a neural network (Rogachev et al., 2019). To increase the original dataset, various data augmentation methods were used, including image mirroring and changes to the angle of inclination of the image in 10–180 degrees.

Creation of a SaaS-System for Image Analysis in Agriculture Using Artificial. . .

Another way that allowed expanding the dataset was adding incorrectly recognized images from those that were not originally included in it. The total size of the dataset was 6500 images. For acceleration, training was performed on a GPU using CUDA. This was achieved by using a GPU based on the Nvidia RTX 2080TI chip, the CUDA Toolkit 11.4 library, and the Pytorch framework that supports the library (Nicely & Kraus, 2021).

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Direct distribution: 1. Has three inputs (input signal, weight, and bias); 2. Has one output.

Backpropagating: 1. Has one inlet (outlet), which is the same size as the outlet; 2. Has three (dx, dw, and db) outputs.

3

Results

3.1

The Architecture of the Developed Network

According to the recommendations given in the Sik-ho Sung review (Tsang, 2018), ResNext 101×16 was chosen as the architecture. Preliminary tests were carried out on ResNext101×8 and ResNext101×32. ResNext101×8 gave lower accuracy, and ResNext101×32, without increasing accuracy, slowed down the learning algorithm. Other architectures were not considered in the development of the prototype. A feature of the ResNet architecture is the parallel training of convolutional layers and the combination of the initial data of the block of network layers with its result. Let us take a closer look at the main types of layers used in high-precision neural networks. a) Convolution Layer N: Batch size (Number of images in 4D tensor) F: number of filters in the convolution layer H/W: image height/width (usually H = W) H’/W’: collapsed height/width Stride: The number of pixels that will move the sliding convolution window. The Convolutional Layer is the main building block of the Convolutional Network, which does most of the computational work (Stanford Courses, n.d.). b) Fully Connected Layer. The input data is a four-dimensional tensor. A tensor consists of measurements: H—height, W—width, Depth—depth, Batch size

c) Rectified-Linear unit Layer (ReLU) The ReLU layer will apply the function to all elements of the input tensor without changing its spatial or depth information (Agarap, 2018; Brownlee, 2019). ReLU is just a type of activation function possessing the following features: • Easy to calculate (forward or backward propagation); • Less affected by fading gradients on deep models. The downside is that neurons can die irreversibly if we use a high learning rate.

3.2

Training Developed by CNN

The training took place on a pre-trained model on ImageNet, by retraining the classifier. The following classes for training were selected: 1. Good field; 2. Problematic field; 3. Unseeded field or not field. The original image size is 255×255 px. Since the training occurred on a pre-trained model, it was possible to change its resolution. The Adam algorithm was chosen as the optimizer. The step for training was 0.003. The steps were also tested in the range from 0.001 to 0.1; the most successful option was 0.003; with a lower value, more training epochs were required; with a higher value, the network quickly achieved overfit.

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3.3

A. F. Rogachev et al.

Network Results

The network results in a class for a 256×256 px image. However, the original images are images of fields of several thousand by several thousand pixels, so we cut the image into parts of 300 px and recognize it separately, then form a layer mask and overlay it on the original image.

10% increase in accuracy. This also leads to creating a service that users can interact with (Rogachev et al., 2020; Tokarev et al., 2020). However, this approach has several problems: linear stump load and low border accuracy. To solve these problems, we plan to switch to segmentation-type networks.

5 3.4

1. REST (Representational State Transfer) and web-socket API (application programming interface) for client interaction with the neural network; 2. Serving static files to the client (layout, styles, scripts). REST is an architectural style of the interaction of components of a distributed application in a set API is a description of the ways in which one computer program can interact with another program. The following technologies were used for implementation: 1. Python—for interacting with the network; 2. Node.js—for SSR; 3. Web-sockets—as an additional technology for exchanging data with a client.

3.5

Client

The client is implemented as a SPA (single page application) in React js + Redux. Communication with the server is organized through web sockets as middleware for Redux. The use of web sockets is due to the display of processing progress in real-time.

4

Conclusion

Server

Discussion

The main result of the created service is the ability, within the framework of the website, to receive an image that represents the original snapshot of the field and the layer mask superimposed on it. A visual color scheme has been adopted, according to which the red zones do not indicate agricultural fields and areas of non-sown fields but translucent red zones—problem areas of agricultural fields. The results can be used in various ways for analysis by experts and the use of results by third-party services. Testing of the classification network has shown that neural networks can successfully solve problems of recognizing the state of fields (Alzubaidi et al., 2021; Kujawa & Niedbała, 2021; Melikhova & Rogachev, 2019). Comparing the results obtained with previous versions, it turned out to achieve a

The conducted research allowed us to formulate the following conclusion. 1. The use of the ANN classification type has shown that neural networks can reliably solve the problems of reclamation recognition of the state of agricultural fields. 2. Advanced information technologies allow transferring resource-intensive calculations to the computing cloud. 3. Computing in the cloud will help more convenient scaling of computing power when changing the formulation of the problem of intelligent classification. 4. It is economically feasible to monetize a cloud service as a SaaS system. Acknowledgments The publication was funded of the RFBR under the project No. 20-37-90142. Data availability The following dataset is attached to the article: https://doi.org/10.6084/m9.figshare.20383002

References Agarap, A. F. M. (2018). Deep learning using Rectified Linear Units (ReLU). Accessed January 17, 2021, from https://arxiv.org/pdf/ 1803.08375.pdf Alzubaidi, L., Zhang, J., Humaidi, A. J., Al-Dujaili, A., Duan, Y., Al-Shamma, O., et al. (2021). Review of deep learning: Concepts, CNN architectures, challenges, applications, future directions. Journal of Big Data, 8, 53. https://doi.org/10.1186/s40537-021-00444-8 Ananthanarayanan, R., Esser, S. K., Simon, H. D., & Modha, D. S. (2009). The cat is out of the bag: Cortical simulations with 109 neurons, 1013 synapses. Proceedings of the Conference on High-Performance Computing Networking, Storage and Analysis. https://doi.org/10.1145/1654059.1654124 Brownlee, J. (2019, January 9; updated 2020, August 20). A gentle introduction to the Rectified Linear Unit (ReLU). Accessed January 17, 2021, from https://machinelearningmastery.com/rectified-linearactivation-function-for-deep-learning-neural-networks/ Deep learning. (2022, August 3). In Wikipedia. Accessed January 17, 2022, from https://en.wikipedia.org/wiki/Deep_learning itmanager85. (2021, October 29). With the help of AI NVidia, strawberry harvesting was automated. Overclockers Blog. Accessed January 17, 2022, from https://overclockers.ru/blog/itmanager85/show/ 21708/s_pomoschju_ii_nvidia_avtomatizirovali_uborku_klubniki Kujawa, S., & Niedbała, G. (2021). Artificial neural networks in agriculture. Agriculture, 11(6), 497. https://doi.org/10.3390/ agriculture11060497

Creation of a SaaS-System for Image Analysis in Agriculture Using Artificial. . . Melikhova, E. V., & Rogachev, A. F. (2019). Computer simulation and optimization of parameters of configuration of the contour of moistening under drip irrigation of agricultures. In E. G. Popkova (Ed.), Ubiquitous computing and the internet of things: Prerequisites for the development of ICT (pp. 1193–1201). Springer. https://doi.org/ 10.1007/978-3-030-13397-9_122 Mitus, K. N., Katsko, I. A., & Mitus, A. A. (2020). Software as a service: Models and tools for assessing economic efficiency. RUSAINS. Nicely, M., & Kraus, K. (2021, April 12). Unifying the CUDA Python ecosystem. NVIDIA Developer. Accessed January 17, 2022, from https://developer.nvidia.com/blog/unifying-the-cuda-pythonecosystem/ Onbillion. (2017, September 13). Neural networks: How artificial intelligence helps in business and life. HABR Blog. Accessed January 17, 2022, from https://habr.com/ru/post/337870/ Padarian, J., Minasny, B., & McBratney, A. B. (2019). Using deep learning for Digital Soil Mapping. SOIL, 5(1), 79–89. https://doi. org/10.5194/soil-2018-28 Rogachev, A. F., Melikhova, E. V., & Belousov, I. S. (2019). Research of development and productivity of agricultural crops using uncrewed aerial vehicles. Proceedings of Lower Volga AgroUniversity Complex: Science and Higher Education, 4(56), 142–152. https://doi.org/10.32786/2071-9485-2019-04-38

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Rogachev, A. F., Melikhova, E. V., & Belousov, I. S. (2020). A set of data on retrospective grain yield for neural network modeling. IOP Conference Series: Earth and Environmental Science, 577, 012006. https://doi.org/10.1088/1755-1315/577/1/012006 Stanford Courses. (n.d.). Convolutional Neural Networks (CNNs / ConvNets). Accessed January 17, 2021, from https://cs231n.github. io/convolutional-networks/ Tokarev, K. E., Orlova, Y. A., Rogachev, A. F., Kuzmin, V. A., & Tokareva, Y. M. (2020). Crops reclamation management based on hybrid neuro-fuzzy systems. IOP Conference Series-Earth and Environmental Science, 421, 042015. https://doi.org/10.1088/17551315/421/4/042015 Tsang, S.-H. (2018, December 9). Review: ResNeXt – 1st Runner Up in ILSVRC 2016 (Image classification). Towards Data Science. Accessed January 31, 2022, from https://towardsdatascience.com/ review-resnext-1st-runner-up-of-ilsvrc-2016-image-classification15d7f17b42ac Wageningen University & Research. (2018, December 12). AI takes control in the greenhouse: Team Sonoma wins Autonomous Greenhouse Challenge. Accessed January 17, 2022, from https://www. wur.nl/en/newsarticle/AI-takes-control-in-the-greenhouse-TeamSonoma-wins-Autonomous-Greenhouse-Challenge.htm Zinchenko, L. A., Kureychik, V. M., & Redko, V. G. (2011). Bionic information systems and their practical applications. Fizmatlit.

Development of the Recycling Sector and Its Marketing Support as a Factor in the Sustainable Development of the Forestry Sector of the Economy Marina A. Muravieva , Olga G. Nazarova , Olga V. Gudkova , Valentina V. Silaeva , and Inna A. Tachkova

Abstract

Nowadays, the direction associated with the development of the forest sector of the economy of the Russian Federation is relevant. Using wood processing, it is possible to manufacture various products and materials that can be used in industry and everyday life. The order and rationalization of the use of natural resources are ensured through the processing of wood waste. The facts presented in this research testify to the availability of business development opportunities in the recycling industry. There is a need to create a system related to the use of recycled raw wood materials. This system is a direction that ensures the rational use and development of the forest sector of the economy. The problems of collecting and processing recycled wood affect the furniture and woodworking industries and harm the environment. In this regard, it is necessary to give particular attention to the issues considered in the research. Russian and foreign enterprises manufacture equipment, develop and introduce advanced technologies related to the utilization and processing of wood waste, the production and use of biological fuel, and the production of fuel pellets, granules, and other products. By implementing waste-free production, enterprises increase profitability and environmental friendliness. Despite the development and widespread use of technologies for re-involving waste back into the production process, for the most part, there are no legal acts that regulate these issues. In this regard, state marketing is necessary to implement the considered direction at this stage. In this type of activity, state authorities and management structures at all levels are represented as subjects; citizens, public and private enterprises, and social groups are represented as objects. The authors also formulate measures that will help implement effective interaction M. A. Muravieva (✉) · O. G. Nazarova · O. V. Gudkova · V. V. Silaeva · I. A. Tachkova Bryansk State University named after Academician I.G. Petrovsky, Bryansk, Russia

between state authorities, various departments, and public organizations in the area of wood recycling. Keywords

Forest sector · Timber · Recycling · Waste · Disposal · Circular economy · Public marketing · Technology

JEL Codes

H8 · I0

1

Introduction

Nowadays, the topic related to the development of the Russian forest complex is very relevant. Issues of development of this economy sector are under special control in the Federation Council. Thus, in November 2020, the Decree “On measures to improve the state policy in the area of forestry” was adopted, which affected many areas of the country’s forestry sector (Council of Federation of the Federal Assembly of the Russian Federation, 2020). The Russian Federation has the most significant forest reserves, almost a quarter of the world’s reserves. In Russia, forests are a colossal resource base. However, only half of all wood waste, and in Siberia, which is the most “forest” region of Russia, about 35% of wood raw materials, are used. The rest of the production waste is thrown away without any attempt to recycle it. Practically, wood greens, shavings, sawdust, and bark are not used in processing. Thus, the data indicate great opportunities for the development of entrepreneurial structures in the recycling sector. Trees are renewable natural resources. However, it takes decades to restore forest plantations fully. This affects the climate and reduces the total amount of available resources. Wood processing includes manufacturing basic products and

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_78

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processing waste generated during production (Muravieva, 2019). For the rational use of the wood resources of the planet, it is necessary to use most of the remnants of production, which make up about half of all incoming raw materials. Waste wood is a valuable resource generated in large volumes (depending on the degree of quality); it can be used as a secondary raw material or energy source. Rising disposal costs and growing environmental awareness mean that the recycling of old wood is becoming increasingly important. One of the promising directions in developing the forestry sector of the economy is the reuse of wood. The current realities speak of the need to develop recycling, a circular economy, and maximize waste recycling to ensure efficient operation. This has to do not only with the lack of wood resources but also with drawing attention to the environment. The problems of forming a system associated with the use of secondary raw wood materials, which is one of the directions for the rational use and development of the forest sector of the Russian economy, are very relevant. This is due to the fact that the issues of collecting and processing recycled wood relate to the woodworking, furniture industry, and ecology (Muravieva et al., 2016). Therefore, more attention should be paid to addressing these issues. This topic needs to be considered systemically, in complex. Statistics for 2019 show that more than 5924 thousand tons of waste were generated in Russia during wood processing, and about 70% was disposed of. Different types of disposals were included here, including the production of wood pellets. However, most of the waste was simply incinerated. Simultaneously, nothing is noted about the recycling of wood and its subsequent launch into the processes of the circular economy, recycling and the manufacture of high-tech goods from recycled materials, and the production of furniture. In 2019, waste from the furniture industry amounted to approximately 185.5 thousand tons, of which only 21% was recycled (the percentage is lower because scraps of tiles and furniture waste are not burned). Data from European countries indicate that the main supplier of recycled wood is not the timber industry at all. For example, in Germany, the main source is the road construction complex (27%). Shopping malls and wooden packaging are in second place (22%). Municipal waste ranks third (20%). Woodworking production is in fourth place (14%). Import of wood is about 10%. Small-scale supplies of secondary wood resources provide the remaining 7%. The bulk of this waste is recycled. There are also no data on the percentage and volume of waste in Russia that occur in various industries. However, even without this data, it is apparent that significant volumes of dilapidated furniture, building fixtures, wooden frames,

M. A. Muravieva et al.

and doors appear only when the renovation program is carried out. A particular issue is the number of forest resources that can be saved by using recycled wood as a raw material. Calculations on the possibility of processing by only two Kronospan enterprises in Elektrogorsk and Yegorievsk demonstrated that approximately 500 thousand cubic meters of wood could be saved. It should also be considered that many enterprises regularly face problems with the supply of raw materials, which means that recycling could well help to solve this problem.

2

Materials and Methods

Speaking about the formation of the recycling system and the development of a circular economy in the forest sector, we should consider the experience of single but already functioning enterprises. European business entities were the first ones to talk about the possibility of using secondary raw materials. This idea was developed from a purely economic point of view. The search for cheaper raw materials came to the fore. This direction has been successfully implemented in the enterprises of France, Luxembourg, and Belgium. In Russia, there are all prerequisites for introducing such a practice. Thus, in the Moscow Region, the average cost of raw materials in terms of wood per cubic meter of chipboard is about 22 euros, in Bashkiria—about 28 euros. The cost of 1 m3 chipboard in European countries is less than 12 euros. Therefore, it will be very relevant for Russia to resolve the issue of reducing the cost of wood-based panels. The main suppliers of secondary wood resources for processing enterprises are recycling companies (operators for handling municipal solid waste), construction organizations, woodworking plants, and municipal landfills. Thus, the LLC “Kronospan” received a license for the collection, transportation, further processing, and subsequent disposal of waste, representing the fourth hazard class. Waste in the form of metal, glass, and film is often found in recycled wood materials; it is transferred to enterprises that recycle these materials. When launching a program for the collection and processing of recycled wood in the Moscow Region, the enterprises of LLC “Kronospan” tried to assess the prospects of the project without resorting to government support. Approximately 300 tons of waste are collected at the Yegorievsk site per day. To achieve this goal, the organization lacks 1700 tons. According to estimates, two enterprises of LLC “Kronospan” near Moscow are quite possible to process more than 1 million tons of recycled wood. Thus, it becomes possible to make a complete transition to its use as a raw material resource in chipboard production.

Development of the Recycling Sector and Its Marketing Support as a Factor in the. . .

The authors think that the idea of using resources for reuse in the production process is beginning to be implemented in Russia. Thus, in 2019, in addition to LLC “Kronospan,” IKEA also started to accept old furniture for recycling, planning to organize a cyclical service, thereby increasing customer loyalty to its product line, optimizing furniture production, and finding wider use of biofuels. Other companies are ready to support this initiative, including large plate manufacturers like Kastamonu, Egger, and UPG. The Egger group in Germany, the UK, and Romania has its Timberpak enterprises engaged in procuring secondary raw materials. The used wood is prepared for the production of chipboard. Also, the company’s plants generate large volumes of their waste and by-products that can be used to produce wood-based panels and generate thermal and environmentally friendly electricity. The first experience of Kronospan and IKEA shows positive results, which indicates the relevance of the development of the recycling of wood resources and the formation of a waste collection system. However, in collecting and processing recycled wood, these enterprises face factors that hinder the development of recycling. To change the situation, practicing organizations have ideas about taking the necessary measures. Proposals related to changing individual items and the existing sanitary rules and norms, supplementing the Federal law “On production and consumption wastes” (Russian Federation, 1998) in terms of listing those wood products that can be processed and should not end up in landfills, they should be returned as a new product to end-users. Also, as part of the development of the considered direction, it is possible to include the recycling fee in the duty on imported products. Implementing a pilot project to collect used furniture from the population of St. Petersburg, IKEA analyzed the current legislation governing waste management. The authors also analyzed all risks and the existing infrastructure in Russia, specifically in large metropolitan areas. As a result, it was noted that many issues are devoted to the processing of technical wood by legal entities. However, problems related to the collection of recycled wood and old furniture by the population are poorly reflected and are practically not regulated. In turn, Russian and foreign enterprises produce equipment and develop and introduce advanced technologies related to the utilization and processing of wood waste, the production and use of biological fuel, and the production of fuel pellets, granules, and other products. By implementing waste-free production, enterprises increase profitability and environmental friendliness (Goncharenko et al., 2018). Manufacturers and suppliers demonstrate the following categories of equipment:

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• Installations and lines for the production of wood fuel in granules, pellets, and briquettes; screw, mechanical, electrical, and hydraulic devices for chopping firewood, briquette molds, granulators for the production of pellets, and lines for the production of fuel briquettes; • Machines that utilize wood waste generated during the production process; wood chipping equipment, rotary and drum crushers, woodchip production plants, shredders, and wood waste shredders; • A technique that converts wood fuel into energy; technologies and lines for the production of biofuels from wood; automatic and semi-automatic pellet boilers; mobile, stationary, and modular pellet boilers. Additionally, for example, in Siberia, a unique technology for processing wood waste is being introduced. The development was based on the ability of some types of fungi to destruct wood (Dementieva, 2021). This requires fresh or stale sawdust, water, and a few additives of mineral origin to help develop the mycelium at the initial stage. Mushroom growth is very fast. Penetrating into all holes, they eventually cover the entire substrate. Biohumus (compost) is formed a few months later. This technology was developed by scientists over 20 years ago. However, it is currently in demand. This is due to the fact that from 2022 it is planned to introduce a ban on the open burning of waste generated during sawmilling in Russia. It will also be forbidden to throw them out. Simultaneously, the embargo on the export of round wood will come into force, which should be processed in the country, and, consequently, the volume of waste will also increase. Enterprises solve this problem in different ways. Some convert their boilers to biofuels; others produce briquettes and pellets or use wood chips to produce cellulose or turpentine spirits. In the light of the decarbonization of the economy, the considered technology has a very attractive prospect, which consists of the following: • Treeless spaces are decreasing because the landfill for storing sawdust is huge areas on which nothing can grow; with the formation of humus, even without organizing its export, the territory quickly overgrows with forest; • Sawdust, during normal decay for many years, emits carbon dioxide into the atmosphere and often smolders, emitting a huge amount of carcinogenic organic compounds and carbon monoxide; when processing these wastes with mushrooms, such options are excluded; • The final product received can be used in reforestation. Processing of wood waste based on the use of innovative technologies in woodworking and the use of sawdust is a

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profitable and promising area for business. This industry can ensure close interaction between large industrial forest complexes with medium and small representatives of business structures, making recycling one of the most effective and promising areas of activity. However, business entities that belong to small and medium-sized businesses have no opportunity to use most waste processing technologies due to their high cost or legislative procedures that are associated with certain difficulties. Thus, according to the calculations of LLC “Kronospan,” to install a recycling production line with a capacity of 100–200 t/h, it is required to invest approximately 26.160 thousand euros, including the cost of vehicles, the purchase of containers for the collection and transportation of waste, mobile crushing machines, equipment for cleaning secondary wood, and the processing plant. Thus, 1 million tons of waste per year can be processed by four installations, which means that the total cost of investments can be more than 1 million euros. In this regard, a significant increase in demand for wood waste processing from business structures can be provided by state support. Currently, most enterprises in Russia often have neither economic incentive to use the practice of recycling nor infrastructural opportunities for the collection and processing of waste. The lack of legal acts regulating the considered issues also hinders the development and widespread use of wood recycling technologies. Three years ago, it was already proposed to draw up a roadmap that would help increase the level of wood waste collection, thereby providing recycled pulp and paper enterprises and organizations engaged in deep wood processing. The following suggestions were made: • Mandatory separating collection of wood materials and wood waste by state, municipal organizations, and institutions with state participation; • Development of incentive and incentive measures for representatives of small and medium-sized businesses that collect, sort, and transport wood waste; • Drawing up criteria and establishing a procedure for introducing temporary restrictions on the export of unprocessed wood based on the use of quotas or the application of export duties; • Increasing the share of wood raw materials collected by various organizations and households that collect and carry out primary processing of secondary wood resources; • Organization of centers for collecting wood waste in places of large garbage dumps and in the areas where waste processing plants operate, with the further direction

M. A. Muravieva et al.

of this waste to the relevant enterprises involved in the processing of wood material. Except for actions to create a system of legal acts that regulate this issue, a separate section must be included in the Strategy for the Development of the Forest Complex until 2030, which will deal with the processing of secondary raw wood materials and reflect specific actions to address current problems (Government of the Russian Federation, 2021). Local government authorities, organizations implementing the “garbage program,” and enterprises for the production of boards and shopping centers must be actively involved in drafting regulatory documents related to the formation of a system for the collection and supply of recycled wood for processing. State marketing is necessary to implement the considered direction at this stage. Acting as a marketing subject, state structures, along with the seller and consumer, play a special role in the market. They do not provide direct satisfaction of consumer needs but regulate these processes and help achieve a compromise of interests with minimal social costs. This is because economic and social processes are considered in a single vein and in close interaction with each other. Unlike a single company, the state is also interested in the efficient functioning of the economy (Kamalova, 2015). Marketing research determines future guidelines that allow determining the goals and objectives of economic and social public policy. This information will help to develop effective management decisions, which, in turn, will consider the nature of the development of processes and help to prevent or reduce the negative consequences of crises in the economic and social sectors. Particular attention should be paid to the importance of the media, which act as an active participant, influencing the consciousness of the population and the economic situation in the market. Stories and materials that they present can, in a short time, lead to a certain stir or provoke social tension. However, journalists admit that information is often biased and preconceived. Considering these points, the information activity of public authorities must be aimed at providing truthful and timely data. In state marketing, state authorities and management structures at all levels are represented as subjects; citizens, state and private enterprises, and social groups are represented as objects. Goods are public services and social development programs. The purpose of marketing is to implement and distribute them. A high degree of monopolization of all economic processes, and the dominant influence of legal norms, which are established by the state itself, determine the characteristics of the market.

Development of the Recycling Sector and Its Marketing Support as a Factor in the. . .

3

Results

State policy that reflects issues related to waste management must focus on reducing their generation and increasing the share of return to the production process. To maintain this policy, the following actions should be performed: • To focus on the prohibition of wood waste disposal, including waste of fourth and fifth classes, which include waste from furniture production and the manufacture of fiberboard, chipboard, and wooden packaging; • To introduce them into the composition of industrial waste, which contains useful components, and to prohibit their disposal (Government of the Russian Federation, 2017); • To clarify the requirements for groups of the same type of waste; • To establish that such waste should be treated and disposed of, including through the production of fuel chips. Given the proposals presented, incentives will be created for the separate collection of wood waste and the development of infrastructure necessary for its future recycling from business entities. The existing legislation does not define a general approach regarding the following point: further processing based on the grinding of wood waste is the utilization or neutralization of this waste. This circumstance leads to the formation of an additional administrative barrier in the development of technologies and the work of the processing companies. Nowadays, only representatives of large businesses have access to the development of this area. The forestry sector must involve other partners involved in the recycling process. This, it is necessary to perform the following next steps: • To eliminate technologies associated with the disposal of wood waste, which does not have a significant impact on the environment; • To adjust the list of objects of the Federal State Environmental Expertise in the area of technical documentation schemes for new equipment and technology in paragraph 5, article 11, Federal law “On ecological expertise” (No. 174-FZ) (Russian Federation, 1995). The use of state marketing will help remove the existing excessive administrative barriers that hinder the development of the wood waste processing industry; this will also attract many interested economic entities who want to develop a recycling business. It is also necessary to pay attention to issues related to the regulation of licensing activities in the area of wood waste

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management because financial costs represent a significant barrier today: • At this stage, to promote the development of wood waste processing, it is necessary to turn to the practice of 2012–2016, when waste management activities were carried out without obtaining a license for all wood waste; • Elimination of additional financial costs associated with licensing issues for waste accumulator enterprises and organizations engaged in transportation, processing, and disposal. Nowadays, for the development of the considered industry, one of the timeliest decisions is the formation of a common information system that allows providing potential consumers, who are waste producers, with reliable and upto-date information about companies that specialize in the area of recycling or rather in their locations, requirements to accepted waste, their minimum processing volumes, and price. Waste aggregation centers could help solve issues related to the accumulation and transportation of waste from enterprises that produce a small amount of waste daily, i.e., up to 500 kg. The development of interdepartmental and governmentsupported projects related to introducing a circular economy into production will be a timely event. This will help implement effective interaction between government authorities, various departments, and public organizations in the area of wood recycling. In addition to the above, it is necessary to create mechanisms to stimulate investment in the area of technological modernization and development of waste processing infrastructure, the implementation of information work by government agencies regarding reasonable production, and reasonable consumption.

4

Conclusion

The system of using secondary raw wood materials is a promising direction for developing the forestry sector of the economy and for humanity as a whole. It solves economic issues and simultaneously removes several important issues associated with the provision of enterprises with raw materials and waste disposal. Most importantly, it also solves many environmental problems. Nowadays, only representatives of large businesses have access to the development of this area, and it is important for the forestry sector to involve other partners involved in the recycling process. The use of state marketing will help in removing the existing excessive administrative barriers that

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hinder the development of the wood waste processing industry, as well as in attracting a large number of interested economic entities who want to develop a recycling business.

References Council of Federation of the Federal Assembly of the Russian Federation. (2020). Decree “On measures to improve the state policy in the area of forestry” (November 3, 2020 No. 475-SF). Accessed September 11, 2021, from http://www.consultant.ru/cons/cgi/ o n l i n e . c g i ? r e q = d o c & b a s e = E X P & n = 753847#pcMKQpSchMx08IM21 Dementieva, E. (2021, September 16). Sawdust in the head: A unique technology for recycling wood waste is being introduced in Siberia. Rossiyskaya gazeta. Accessed November 18, 2021, from https://rg. ru/2021/09/16/reg-sibfo/v-sibiri-vnedriaiut-tehnologiiu-pererabotkidrevesnyh-othodov-v-biogumus.html Goncharenko, L. P., Voronova, T. A., Sybachin, S. A., & Sharko, E. R. (2018). Application of innovative production technologies at the enterprises of the woodworking industry in Russia. Theoretical and Applied Economics, 3, 70–87. https://doi.org/10.25136/ 2409-8647.2018.3.27199 Government of the Russian Federation. (2017). Decree “On approval of the list of types of production and consumption waste, which include

M. A. Muravieva et al. useful components, the disposal of which is prohibited” (June 25, 2017 No. 1589-r). Accessed November 11, 2021, from https:// base.garant.ru/71735154/#ixzz7CsWmLPyO Government of the Russian Federation. (2021). Decree “On approval of the strategy for the development of the forest complex of the Russian Federation until 2030” (February 11, 2021 No. 312-r). Accessed November 11, 2021, from https://docs.cntd.ru/document/573658653 Kamalova, A. (2015). State marketing as a factor in strengthening macroeconomic indicators. In Proceedings of the International Conference of Eurasian Economies (pp. 775–779) Accessed November 19, 2021, from https://www.avekon.org/papers/1439.pdf Muravieva, M. A. (2019). Innovative development as a basis for a stable growth of the forest sector of economy. Financial Life, 3, 26–29. Muravieva, M. A., Nazarova, O. G., & Silaeva, V. V. (2016). Transition of the forestry sector of the economy to an innovative development path: Problems and solutions. In Y. G. Lavrikova (Ed.), Development of territorial socio-economic systems: Issues of theory and practice (pp. 185–188). IE UB RAS. Russian Federation. (1995). Federal law “On ecological expertise” (November 23, 1995 No. 174-FZ, last edition). Accessed November 14, 2021, from http://www.consultant.ru/document/cons_doc_ LAW_8515/ Russian Federation. (1998). Federal law “On production and consumption wastes” (June 24, 1998 No. 89-FZ, last edition). Accessed November 12, 2021, from http://www.consultant.ru/document/ cons_doc_LAW_19109/

The Influence of Macroeconomic Factors on the Art Market (on the Example of International Sales of the MacDougall’s Auction House) Arseniy G. Morgunov

and Irina N. Belova

Abstract

The paper aims to investigate the effect of macroeconomic factors on the Russian fine art market between 2011 and 2018. The Russian fine art market is an emerging market, and the study of its specifics presents an interesting case. Oil price is used as a proxy for the state of the Russian economy. The international market for fine art is largely defined by trade through international auctions. The study constructs a quality-adjusted price-determining hedonic regression of art price using sales data from MacDougall’s, an international auction house specializing in Russian art, to analyze the impact of oil price as a pricing factor for the market. The investigation finds no impact of oil price on the market during the specified period, indicating the need for further research, including the impact of the geopolitical macroeconomic context. Nevertheless, this research has practical value due to the significance of the price determination model in the absence of oil price as a variable. Keywords

Art market · Russian art · International auctions · Oil price · Russian economy · Home bias · Hedonic regression

JEL Codes

F0 · G1 · Z11

A. G. Morgunov (✉) · I. N. Belova Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

1

Introduction

Since the last decade of the twentieth century, the world has seen new developments in the global art market. Under the influence of globalization, art markets have become increasingly transnational and less western-centered. This non-Western perspective was ensured by the emergence of new markets in the global art trade, such as China, India, and Russia (Quemin & Van Hest, 2015). Research on national art markets in emerging economies was initially limited due to the lack of available data. However, due to the continued interest in investment, scholarship in the field developed further to create descriptive models and investigate art market diversification potential for investors (Candela & Scorcu, 1997; Renneboog & Spaenjers, 2011, 2013; Sotheby’s, 2016). Nevertheless, there remain significant knowledge gaps in understanding the mechanisms of national art markets in this globalized era, particularly the Russian art market. There is an academic consensus that the global art market can be differentiated into submarkets with their own distinct functionality (Codignola, 2015). This uniqueness of submarkets is particularly pronounced when considering the case of the Russian art market, given the discontinuity in Russian historic, social, and artistic developments and the emergence of the new elites under the conditions of political instability and economic dependency on oil. Therefore, the Russian market represents an interesting case for the analysis of the impact of macroeconomic factors on the art market. In the last two decades, Russian art, which was not previously well-known and appreciated across the world (with some exceptions), grew in prominence and price. The 2000s saw Russian art departments formed in all major international auction houses. International auction houses have unequivocally become the most important hubs selling Russian art in the twenty-first century. Existing research has identified economic growth and disposable income of the wealthy classes as important determinants of art market activity (Goetzmann et al., 2010,

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_79

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A. G. Morgunov and I. N. Belova

p. 1; Renneboog & Spaenjers, 2011). The current study accepts the postulation that Russian art is mainly bought by Russians living in Russia and outside their native post-Soviet territories. This hypothesis is supported by multiple mass media accounts (BBC News, 2016; Russkiy Portret, 2017). This study hypothesizes that macroeconomic factors, specifically the price of oil, influence the price of Russian artworks. Oil price shocks also have a stronger effect than monetary shocks on the Russian economy (Ito, 2008). Therefore, the oil price is particularly suitable as an indicator when it comes to a time marred by the instability of the Russian ruble. The share of consumption relative to saving is also much higher in Russia than in Western economies, 70% compared with 45% (Benedictow et al., 2013, p. 404), suggesting that wealth derived from oil should be quickly visible in consumption behavior. Consequently, this study takes oil as an indicator of Russian (elites’) wealth. Therefore, this paper seeks to develop a quantitative model to analyze the impact of oil prices on Russian art prices. Therefore, we expect that oil prices will have a directly observable positive effect on the price of Russian artworks.

2

Methods

While the art market is not restricted to auction sales, it has been shown that auction prices serve as a reference point for the wider market (Renneboog & Spaenjers, 2013, p. 6). Upon consideration of three major international auction houses trading Russian art internationally, namely, Sotheby’s, Christy’s, and MacDougall’s, we decided to base this research on the results of the international auctions of the latter. MacDougall’s Fine Art Auction house is the only significant auction house that specializes exclusively in Russian art. Created in 2004, the house has quickly risen to become one of the three world leaders in Russian art at auction, responsible for a quarter of the global market (MacDougall’s, n.d.-a). Importantly, the data provided by MacDougall’s Fine Art Auction is publicly available in the open access domain and is open for analysis. The data on prices and the hedonic characteristics of the Russian artworks considered in this study are taken from the auction’s website (MacDougall’s, n.d.-b). The data on oil price (Brent Crude) is taken from the U.S. Energy Information Administration (EIA) (2022). The prices are spot prices drawn at half-yearly intervals. A research decision had to be made on the research timeframe. The 2000s oil boom led to accelerated financial polarization in the country. The research decision has been made to limit the research timeframe of the non-pecuniary consumption of the Russian moneyed class to the period from winter 2011 to summer 2018.

Analyzing available literature on possible quantitative methods for the study, we decided to use a hedonic regression to determine the price-setting characteristics of Russian art. A quality-adjusted determination of artworks makes it possible to analyze art market trends and investigate the determinants of art prices (Renneboog & Spaenjers, 2013, p. 7). The quality-adjusted model allows us to analyze the impact of oil prices. Due to the “heterogeneity and liquidity” of artworks, the methods used for price index construction of commodities or financial assets are unavailable to this study, leaving the hedonic regression method to be the least errorprone method allowing for the investigation of price determinants (Renneboog & Spaenjers, 2013, pp. 6–7). Moreover, how often art tastes change is an ethereal concept; given the limited number of years in the scope of this research, demarcating uniform periods of changing tastes is inherently subjective unless based on prices per category of art. While this approach is possible in theory, we could expect an invalidating extent of collinearity between chosen timeframes and the art market in practice. Only fine art pieces are considered in the research. Works of art such as dining sets, cigarette boxes, and other miscellaneous items of artistic value are not considered due to their different price-determining characteristics. The price-determining equation (semilog hedonic regression) is constructed in the following form: M

ln Prt =

αm X mrt þ γ 1 θt δ1 þ γ 2 θt δ2 þ γ 3 θt δ3 þ εrt m=1

where: Prt represents the price of Russian artwork r at time t, and Xmrt is the value of characteristic m of Russian artwork r at time t. The coefficients γ x reflect the impact of oil price, θ, at time t on the price of Russian artwork Prt. The coefficients δx are dummy variables demarcating the different effects of oil price on the prices of Russian artworks depending on the time when the sale occurs; δ1 = 1 for auctions winter 2011 through summer 2014 and 0 otherwise, δ2 = 1 for auctions winter 2014 through winter 2015 and 0 otherwise, and δ3 = 1 for auctions summer 2016 through summer 2018 and 0 otherwise. The coefficients αm reflect the attribution of a shadow price to each of the m characteristics (Renneboog & Spaenjers, 2013, p. 7). This shadow price is the attribution of a monetary value to the characteristics of artwork that do not themselves have a quantifiable market price. In addition to the artist dummies, which reflect the uniqueness of each artist, and the medium dummies, which reflect how works on different media are priced differently, the model includes the following hedonic variables: • Attribution dummy—whether a work is signed or not

The Influence of Macroeconomic Factors on the Art Market (on the Example of. . . Table 1 Model specifications

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Included variables Utility bearing characteristics No Yes Yes

Model 1 Model 2 Model 3

Oil price Yes No Yes

Source: Created by the authors

• Size—this paper uses the variables of height and width of an artwork, as well as height squared and width squared, measured in centimeters and centimeters squared. The semi-log nature of the hedonic regression is necessary due to the non-normal distribution of the prices of sold artworks. Before conducting the empirical analysis, the decision was made to refine the data by removing the datapoints that threatened the internal validity of the research. If an artist has one sold work in the dataset, and the work’s medium occurs only once in the dataset, we remove the datapoint for that artwork. Otherwise, the medium will be mixed with the artist, meaning that the medium and artist variables cannot be used in tandem, as is necessary for the proposed model (N = 913). Three models are considered. The variables included in each model are shown in Table 1. Model 1 examines the extent to which the price of Russian art is an expression of the oil price. Model 2 examines the purely artistic price determinants of the Russian art market. Model 3 demonstrates to what extent Model 2 and Model 3 are complementary, thereby allowing for the analysis of Russian art consumption behavior.

3

Results

Model 1: Oil Price For the period 2011h2 to 2014h2, oil price did not significantly predict the price of artworks (β = -0.002, t(536) = 0.18, p = .875). From 2015h1 to 2015h2, the model breaks down due to collinearity. From 2016h1 to 2018h1, oil price did not significantly predict the price of artworks again (β = -0.001, t(277) = -0.15, p = .882).

Model 2 (Table 2) Model 2 explains a significant amount of variance in art price: R2 = .88, F(209, 596) = 0.000, p < .001. We see that height and width have a significant positive effect on price: β = 0.022, t(596) = 5.21, p < .001; β = .021, t(596) = 6.97, p < .001. On the other hand, height2 and width2 have a significant negative effect on price: β = 0.00007, t(596) = -3.59, p < .001; β = -0.00005, t(596) = -4.23, p < .001. Model 3 (Table 3) Model 3 explains a significant amount of variance in art price: R2 = .89, F(212, 593) = 0.000, p < .001. Similarly to Model 2, we see that height and width have a significant positive effect on price: β = 0.021, t(593) = 5.22, p < .001; β = 0.020, t(593) = 6.68, p < .001. We also see that height2 and width2 have a significant negative effect on price: β = -0.00007, t(593) = -3.72, p < .001; β = 0.00004, t(593) = -3.84, p < .001.

4

Discussion

Analyzing the results, we see a few interesting values that must be discussed further. One of the conclusions of this study is the statistical insignificance of whether a work is signed or not. It seems to be paradoxical, given the significance of (most of) the artist dummies. Indeed, the question of authenticity permeates all art markets. It should also be highlighted that the artist signature is the only identifier of provenance used in this model. This finding directs us to the discussion of national ideas of trust. It is highly possible that the insignificance of a signature is a remnant from the Soviet era. During this period,

Table 2 Model 2. Utility bearing characteristics Log-transformed price Signed (The work is signed) Height (cm) Width (cm) Height2 (cm2) Width2 (cm2) Medium Artist

Coefficient -0.055 0.022 0.021 0.00007 0.00005 Not Shown Not Shown

Source: Created by the authors based on the results of the regression model

Robust standard error 0.146 0.004 0.003 0.00002 0.00001 – –

p 0.704 *og/йg/öy/üy/öi/üi (Bang, 1927; Ramstedt, 1957). The hypothesis is based on the sound transitions

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b > v > ў > y > g. It explains the morphonology of the inter-Turkic root in a very complex and multi-step way and is not supported by similar sound changes in other root morphemes. The third hypothesis is close to the model developed by V. Bang and G. Ramstedt (1927, 1957). It is presented in two complementary versions: 1. еb > еp > еv > еü > оy/öy (Polivanov, 1968); 2. äv > öv > öj > üj (M. Ryasenen). E. D. Polivanov compares the transition i > j with similar facts from the German language: hauz [home]—hoizer [houses], Deutsch—dojč [German,] which demonstrate the sound interchange, acting in a single language of a later time, and cannot be a complete analog of sound changes in the most ancient Turkic language, which served as the outcome for numerous contemporary languages (Polivanov, 1968). The fourth hypothesis is presented in the model of A. N. Kononov (1958): ob/ov (oba “Yurt, family”) > äb/äp/äv/yj/ ӱj. The hypothesis is attractive for its simplicity and flexibility. Compare the following: 1. Azerbaijani, Turkish, and Crimean Tatar oba [kibitka, tent, shepherd’s hut; hut, dugout; nomad family (Turkish); nomad (Azerbaijani); quarter, district, country, several yards, farmstead, village (Turkish dialects); pasture (nomads), neighbor (Turkish dialects)]; 2. Turkmen dialects ōvа [aul, country, village]; 3. Uzbek dialects uvva [country]; 4. Tatar dialects uba [den, burrow], etc. These examples are similar in form and meaning to the Mongolian word ovug/otag/ovov/owog [tribe, clan, family] and convincingly demonstrate and support the A. N. Kononov’s hypothesis (1958). The fifth hypothesis is that the common Turkic ew/ow [house, dwelling] comes close to the verb root oi- [dig, dig out] and the substantive root оy [recess, burrow] (Vamberi, 1867). Compare the Kyrgyz uya [nest, family] and uyuk [swarm, cluster; nest (wasp, ant)], in which the root part of uy- etymologically correlates with the word üy [house, yurt, dwelling, housing, room]. The sixth hypothesis is based on a generalization of all previous hypotheses and is schematically demonstrated as follows: еb/еv > еp > еf > üy/оy/öy (Sevortyan, 1974). According to E. V. Sevortyan, the original root vowel was the closed syllable e-, which later moved to the back row (Uzbek dialects оy, Altaic dialects uv, Uyghur uy, etc.), and

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the isolated forms are probably secondary. The assumptions given above are analyzed and generalized by E. V. Sevortyan. The seventh hypothesis was put forward and justified by one of the authors of this research. According to this hypothesis, in language, the closed syllables are not primary, but open syllables are, as evidenced by the facts of children’s speech. These syllables reconstruct archetypal forms of basic vocabulary in the world’s languages. On this basis, we present a prototype of the dwelling name in the most ancient Turkic language in the form of yü [house, yurt]. This idea is attractive in several ways. First, it reconstructs the root in the open syllable’s form. Second, it easily explains the appearance of labial and labiodental consonants in the final position of a number of transform of the root morpheme, as labial vowels in the languages of the world, are easily converted into labial consonants: yü > ib/iv/ir/еv. . . (the primary y- lost shortness and was converted into sounds i, е, ö, and others). Compare, for example, su [water] > su/sub/suv/suk/suy/sū in contemporary languages, where the labial vowel sound combinations are converted into consonants. Third, this phenomenon is based not only on the facts of Turkish but also of distantly allied languages—Manchu-Tungus and Chinese. The idea of the primacy of the form yü [dwelling] is supported not only by the facts of the Saryg-Yugur language (yü/yu/zhü [house, dwelling, housing]) but also by the facts of the Manchu-Tungus languages: 1. Evenki—ǯȳ [dwelling; yurt, chum, urasa, house; burrow, lair, den, nest]; 2. Solon—ǯȳɤ [house]; 3. Even—ǯȳ [dwelling; yurt, chum, urasa, house; household, family; burrow, lair, den, kennel; uterus (of animals)]; 4. Negidal—ǯō [dwelling, yurt, urasa, house]; 5. Oroch—ǯu (g-) [dwelling, house]; 6. Udi—ǯugdala [hut (gable, with two exits and two hearths)]; 7. Ulch—ǯȳɤ(g-) [dwelling, house]; 8. Nanai—ǯо(g-) [dwelling, house]. The Saryg-Yugur yü/yu/zhü [house, dwelling, housing] is presented in three equivalent variants, the last of which is phonetically similar to the Manchu-Tungus nominees of dwelling, and the first two variants—with the Chinese polysemantic word yü [jü] with an inclusive (descendingascending) tone used in the meanings “roof, house, building; dwelling, refuge, shelter; borders, frames, limits, borders, territory; expanse, breadth, space (in general); environment, neighborhood, space, about; appearance, exterior, form, figure; patronage, good attitude, and the best feeling of the soul.” There is no doubt about the etymological identity of the Kyrgyz (üy) and Chinese (yü) words, which are in the

K. Z. Zulpukarov et al.

relationship of metathesis. The metathesis of sounds is characteristic of many Kyrgyz-Chinese words: • Kyrgyz iy- [to bend, flex; to incline, obey]—Chinese yi(with an inclusive/falling tone) [to lean to, bend, incline to, deviate, evade]; • Kyrgyz iy- [dressing, tanning (skin)]—Chinese yi (with a falling tone) [to press on, click on, pull over to, suppress]; • Kyrgyz iy- in the words: iyik [spindle] iyri [curved, sinuous], iyrek [zigzag, convoluted, broken line; zigzag, sinuous]—Chinese yi (with an inclusive tone) [to loop, go zigzag, twist, bend, flex, evade]; • Kyrgyz ish [business, work, deed, enterprise, place of work; accident, case, trouble, incident]—Chinese shi (with a falling tone) [business, deed, enterprise, occupation; business, event, incident, circumstance; accident, incident, unpleasant incident, a nasty case conflict; work, occupation, trade, service; to do, engage, manage, manage, serve, serve, care for; to exercise, constantly practice; force, compel; stick], etc. (in Chinese, the verb and noun are not formally differentiated). These and many other similar examples, demonstrating the prevalence of metathesis in Chinese-Kyrgyz words, indicate that the common Turkic ancient root with the meaning “dwelling” could have the form of an open syllable. On this basis, we propose a new model of the most ancient root with the meaning “dwelling” in the form yü and a scheme of its phonetic-semantic transformation: 1. yü > üy/uy/öy/оy/ўi (the metathesis with the transition of syllable-forming vowel sound ü into the sounds u, ö, and o); 2. yü > yü/yu/zhü/ǯȳ/ǯō (interchange of initial consonants y/ zh/ǯ); 3. yü > yüv/yuv/yiv/yev (transition anterior labial vowel into sound combinations with an end labial-dental consonants); 4. yü > üv/uv/iv/ib/ip/еb/еv/еp/eep/еf/öv/öm/öp (transition of vowel ü into the consonants -b, -v, -p, and -m; the loss of the initial sound quality of brevity and the acquisition with it the properties of ordinary vowels, in one case—the properties of longitude/length); 5. yü > ü/üü/uu (apheresis, i.e., the loss of the initial y- and the transition of the ordinary vowel into long ones); compare apheresis: Kyrgyz sū [water], süt [milk], sen [you]— Yakut ū [water], ǖt [milk], en [you]; 6. yü > üg/ög/üh (metathesis combined with y/g/ h interchange). The interchange of final consonants (b/v/g/y . . .) in the Turkic languages is not exceptional but quite a typical phonetic

On the Etymology of the Kyrgyz Names of Dwelling and Family from the Point of View. . .

phenomenon and occurs in many other cases. Compare, for example: Turkish dialects öv-/öy-/ög- [to mix, blend]; Azerbaijani, Turkish ov- [to rub, knead, crease]; Bashkir ɪv[to rub]; Crimean Tatar og- [to rub, grind]; Saryg-Yugur ug[to grind]; Khakass ig- [to knead, crumple, etc.]; Uzbek, Uyghur, Crimean Tatar, Lobnor, and Khakass еg-; Uyghur dialects ig-; Turkish dialects ek-; Uzbek dialects еy-; Kyrgyz, Kumyk, Nogai, Karakalpak, and Tatar iy-; Turkish dialects iv-, аy- [to bend, flex, can roll over]. Thus, we consider the hypothetical root yü, which has come down to us in various phonetic and semantic transformations, including as part of the Kyrgyz compound word üy-bülö [family, subfamily], to be the proto-form of the common Turkic name of the dwelling. Lexical units similar to the Turkic names of dwelling and family are also found in Indo-European languages: ancient Greek оy- (oikos [dwelling, house]), common Slavic complex suffixes -ovich/-evich (ov/ev [house, dwelling] + ich [inside, internal] in the Turkic languages) and -оvnа/-еvnа (the second component of this affix has the meaning “girl, young lady, woman,” compared with the Chinese word nü [girl, young lady, woman]). Now, let us consider the origin of the second part of the compound word üy-bülö [family, subfamily]. The word bülö/bülȫ [family, family member] is often used independently and has matches in Altaic and other languages. Therefore, we will analyze its origin in a fairly broad context. It is compared with the facts of other Turkic languages: Altaic bilе, Teleutian, Tuvan pilе [family], etc., which are identical to the words of other Altaic languages: 1. Mongolian bül/bölе [family, family member(s), people at the house, household; force], Hazara bоlа [sons of siblings/cousins], Mughal bola [sons of maternal aunts], Dagur bule, Kalmyk bölö, Ordos bölö [children of two sisters], Buryat büle [family, subfamily; cousins (mother)]; 2. Evenk büle [family]. An example from the Buryat language allows us to connect the word bülö/bülȫ [family, family member] with another Kyrgyz word—bölö [cousin and sister (on the mother’s side)]. As we can see, the Buryat word büle in the Kyrgyz language matches two different but the same root words. In the minds of the ancient Turks, maternal kinship, probably, seemed closer than paternal kinship. In the conditions of polygamy and messy sexual intercourse, the blood relationship of the members of the “family” and the clan was determined only by the mother. Paternity of children, born during continuous wars, often remained unknown and uncertain when the soldiers of the victorious side massively raped the women of the defeated side, took them captive, and mercilessly used them as they could. Primitive people probably had

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no concept of sin, humanism, norms of behavior, etc. In such conditions, it was impossible to find out from which man this or that child was born. That is why the meaning of “cousin/ sister (on the mother’s side)” has received a special name in many Turkic languages. Scientists distinguish the following nominees of the meaning “children of two sisters,” in the Turkic languages: (1) bola, bola, bula, bülem, bele, bula, bulla—Turkish dialects; (2) bülü—Gagauz; (3) böle—Kazakh, Karakalpak, Nogai; (4) bölö—Altaic dialects, Kyrgyz; (5) bülä—Bashkir; (6) bilе—Altaic, Tuvan dialects, Yakut; (7) pölö—Altaic dialects, Shor, Lower Chulym; (8) pöle—Khakass, Shor; (9) pölä—Middle Chulym. K. M. Musaev, the author of the section “Kinship and property” in the monograph “Comparative-historical grammar of the Turkic languages. Ancestor language-based. The picture of the world of the proto-Turkic ethnos according to the data of the language,” reconstructs the proto-form of the given examples in the form bölö (Musaev, 2006). The reflexes of this most ancient root submit the following meanings: 1. “Children of two sisters on the mother’s side”—Kazakh, Karakalpak, Kyrgyz, Khakass; “children of cousins”— Kyrgyz, Tuvan dialects; “children of an aunt on the mother’s side”—Turkmen dialects; 2. “Son of the father’s elder sister”—Altai dialects, Shor; “child of an aunt on father or mother”—Turkish dialects; 3. “Cousin brothers and sisters”—Altai dialects, Nogai, Uzbek dialects; “cousin brother”—Altai dialects, Bashkir; “cousin sister”—Turkish dialects (compare KhalkhaMongolian bül “cousin brother/cousin sister on mother, children of sisters”); “son of an uncle on the father’s side, children of brothers in relation to each other, nephew”— Turkish dialects; 4. “Aunt on the mother’s or father’s side”——Turkish dialects; “aunt”—Gagauz; “wife of a brother or uncle”— Turkish dialects; “wife of an older brother”—Gagauz; “appeal to an elderly or old woman”—Gagauz; 5. “Uncle on the mother’s side”—Turkish dialects; “uncle on the father’s side”—Turkish dialects; 6. “Wife of a brother or uncle”—Turkish dialects; 7. “Great-grandson”—Bashkir (Sevortyan, 1978, p. 217). The Turkish word bula [aunt, uncle’s wife] entered the Slavic languages (Bulgarian bula, bule, bulka, buljo, bulena, bulče; Serbian bula, bulka, bulika, bulče), as well as the Albanian (bule) and Hungarian (bulуa) languages, enriching them with terms of kinship and properties. Examples from the Dagestani languages are probably etymologically related to these words: Bezhitin bilIo, Ginukh bilIе, Khvarshin bulIu, and Gunzib bulIū [house, room].

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The derivatives of the most ancient root *bölö in the languages are numerous. Of them, of particular interest are Nogai bölеshеr [children of cousins,] Kyrgyz dialects bölösh [maternal cousin or sister; (in the female taboo) the husband’s maternal cousin (here the name is not called)], and Bashkir büläsär [great-granddaughter] (bülä [great-grandson]), which significantly supplement the composition of reflexes ancestor form bolo (Sevortyan, 1978, p. 219). It is necessary to note one important pragmatic peculiarity of the usage of the term bölö [cousin/maternal cousin]: it is “mutual” and is used by children of siblings to call each other. That is why A. P. Dulzon reveals the meaning of the Chulym-Turkic name of a cousin brother or cousin sister from the speech producer’s position: “pölöm: the son of my mother’s sister, older than me; the son of my mother’s younger sister, older than me (Lower Chulym dialects)” and “pöläm: the daughter of my mother’s sister, if I am a woman; the daughter of my mother’s brother, younger than me” (Middle Chulym dialects) (Dulzon, 1954). As we can see, in the language of the Chulym Turks, in accordance with an established system of kinship, the term pölö/pölä is used in Lower Chulym dialects to denote cousin brother on mother, in Middle Chulym—to denote a cousin on mother. In this case, the age and gender of the speaker are considered. The semantics of the reflexes of the most ancient bölö [cousin brother/sister on mother] covers an extensive cognitive-conceptual sphere in the languages of Eurasia. Its numerous and diverse phonetic and semantic transformations are especially found in the dialects of the Turkish language. The particular meanings of the word are difficult to bring them together to a single denominator. However, it is clear that all of them express the closeness of people by kinship and property, representing them as members of a certain clan or family. We object to the opinion that the common Turkic word bölö is a loan from the Mongolian languages (Kaluzhinskiy, 1961; Pokrovskaya, 1961). The presence of the lexeme bùluò/bùluo [tribe, clan; camp, settlement, nomad] in the Chinese language indicates that the questioned word probably has not Mongolian or Turkic but Altaic-Sino-Tibetan origin. The Chinese language also explains the composition of this two-syllable word, each syllable of which matches separate lexical units of Hanyu:

K. Z. Zulpukarov et al.

the family and maternal cousins, which have come down to us in various phonetic and semantic variants and transformations, are etymologically related to the Chinese compound word buluo and are raised to a single prototype bulо [family, kin]. On this basis, we believe that the second part of the Kyrgyz word üy-bülö [family] and the words bülö [family, family member] and bölö [cousin brother/sister on mother] are reflexes of the most ancient root bulо, spread in the eastern dialects of the Nostratic proto-language.

5

Conclusion

The above allows us to draw some general conclusions: 1. The Kyrgyz nominees of dwelling and family have etymologically identical matches in other languages— Turkic, Mongolian, Tungus-Manchu, and Chinese. 2. These lexical units of the language are complex and consist of separate, independent words, raised to the oldest roots. 3. The most ancient roots of the primary names of dwelling and family are simple, monosyllabic, have an open structure, and generalize all contemporary reflexes in the compared languages. In the process of comparative research of the dwelling and family’s names in a number of language families, we have obtained new results: 1. Within the framework of the problem, the ideas, findings, and conclusions of comparative scientists are generalized and synthesized; 2. Based on the facts of Hanyu, a new version of the origin of common Turkic words with the meanings “house, yurt, family; cousin brother/sister on mother” has been put forward and justified; 3. The origin of the Kyrgyz nominees of dwelling and family has been established in the context of the theory of linguistic and ethnocultural unity of the Altai and SinoTibetan peoples.

References 1. bù/bŭ [to feed/feed yourself, need to be fed; suckled; to bring up, nurse]; 2. luò/laò “housing, refuge, shelter.” The first syllable denotes the actions of the nursing mother and the infant, and the second—the place of feeding and residence. The common Altai bölö refers to the children’s kinship of two mothers-sisters, bringing it closer to the Chinese name of the kin, tribe, and camp. The Altaic names of

Akmataliev, A. A. (2011). Dictionary of Kyrgyz language (Vol. 1–2 vols). Avrasya Press. Bang, W. (1927). Turkologische Briefe aus dem Berliner Ungarischen Institut. I. Brief. UJb., 12, 52–54. Cheremisov, K. M. (1951). Buryat-Mongolian-Russian dictionary. State Publishing House of Foreign and National Dictionaries. Dulzon, A. P. (1954). Terms of kinship and properties in the languages of the Narym region and Prichulymye. Scientific Notes of the Tomsk State Pedagogical Institute, 11, 85–94. Hartmann, M. (1904). Ein türkischer Text aus Kašgar. KSz, 5, 26–65.

On the Etymology of the Kyrgyz Names of Dwelling and Family from the Point of View. . . Kaluzhinskiy, S. (1961). Some questions of Mongolian borrowings in the Yakut language. Works of the Institute of Humanitarian Studies and Problems of Small Peoples of the North of the Siberian Branch of the Academy of Sciences USSR, 3(8), 5–21. Karasayev, Kh. K. (1966). The spelling dictionary of Kyrgyz language. Frunze, USSR. Kastren, M. A. (1926). Fundamentals of the study of the Tungus language (M. G. Peshkova Transl. from German; E. I. Titov Ed.). Irkutsk, USSR. Khaydakov, S. M. (1973). Comparative dictionary of Dagestani languages. Nauka. Kononov, A. N. (1958). Genealogy of Turkmens: The Essay of Abu al-Ghazi Khan of Khiva Moscow. Publishing House of the Academy of Sciences of USSR. Levina, O. V. (2012). Big Chinese-Russian and Russian-Chinese dictionary. Veche. Musaev, K. M. (2006). Kinship and property. In E. R. Tenishev & A. V. Dybo (Eds.), Comparative-historical grammar of the Turkic languages: Ancestor Turkic language-base. The picture of the world of the proto-Turkic ethnos according to the data of the language (pp. 536–561). Nauka. Pokrovskaya, L. A. (1961). Kinship terms in the Turkic languages. In E. I. Ubryatova (Ed.), Historical development of the vocabulary of the Turkic languages (pp. 11–81). Publishing House of the Academy of Sciences of USSR. Polivanov, E. D. (1968). Articles on general linguistics. Nauka. Radlov, V. V. (1882–1883). Comparative grammar of the Northern Turkic languages (Vol. 1: Phonetics). St. Petersburg, Russian Empire.

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Ramstedt, G. I. (1957). Introduction to Altai linguistics (L. S. Slonim transl. from German; N. A. Baskakov Ed.). Foreign Literature. (Original work published 1952) Rasanen, M. (1955). Uralaltaische Wortforschungen. Finnish Oriental Society. Sevortyan, E. V. (1974). Etymological dictionary of the Turkic languages (Common Turkic and inter-Turkic bases on vowels). Nauka. Sevortyan, E. V. (1978). Etymological dictionary of the Turkic languages: Common Turkic and inter-Turkic bases on the letter “B”. Nauka. Tsintsius, V. I. (1975). Comparative dictionary of the Tungus-Manchu languages (Vol. 1). Nauka. Vamberi, H. (1867). Cagataische Sprachstudien enthaltend grammatikali – schen Umriss, Chrestomatie und Wӧrterbuch der Cagataischen Sprtache. Leipzig. Yudakhin, K. K. (1965). Kyrgyz-Russian dictionary (Book I–II). Soviet Encyclopedia. Zulpukarov, K. Z. (2016). Introduction to the Chinese-Kyrgyz comparative linguistics. Biyiktic plus. Zulpukarov, K. Z., Amiraliev, S. M., Zulpukarova, A. K., Akmatova, A. A., Zhoroeva, A., & Abdullaeva, Z. (2021). Reflexes of the Most Ancient Root *er “male” in Eurasian Languages. Open Journal of Modern Linguistics, 11(1), 104–119. Zulpukarova, A. K. (2019). The phenomena of asystemicity in the personal-pronominal paradigm of language. Thesis of Dissertation of Candidate of Philological Sciences. Maxprint.

Labor Migrants in the Economy of GCC Countries: History, Modernity, Problems, and Perspectives Fatima Ahmadi

Abstract

The paper aims to dissect the labor migration case of the GCC region. It shows that the aftereffects of the migration experience for the countries of the region were accompanied by a decrease in the participation of citizens in the human capital market and, in some cases, led to a shortage of money in the marketplace. Accordingly, the policymakers of these countries considered measures to nationalize the labor market. This has created difficulties for citizens and immigrants. The examples of nationalization in different countries of this region show its importance for the governments of the Gulf Cooperation Council countries. The research novelty lies in the fact that the complications in the economies of the GCC countries caused by a significant number of non-native laborers in the GCC countries, together with the economic sectors and natural resources of these countries, the labor market, and their own specialties, have found a solution. The source of information for this research was the Statistical Offices of the GCC countries, World Bank, International Labor Organization, GCC Statistical Center, and previous studies on this issue. Keywords

Labor · Migrants · Nationals · GCC · Occupation · Nationalization · Foreign labor

1

The applicability of the research lies in the fact that the GCC states (Bahrain, Qatar, Kuwait, the UAE, Oman, and the Kingdom of Saudi Arabia) are the third-largest importer of labor after Europe and South America. Approximately more than 14% of the world’s migrant workforce is employed in this region. Foreign labor significantly influences the socioeconomic dynamics of the GCC countries, the maintenance of which remains the focus of their governments’ attention. The flow of this labor force interaction at the local, regional, and global levels has been investigated since the second half of the twentieth century. This research attempts to analyze in more detail the major reasons for the significant participation of immigrant workers in the job market of the region, such as insufficient participation of citizens, lack of technical and professional labor among citizens, and the duality of the labor in the GCC region. The specifications of the workforce market of the GCC countries, such as labor sectors, the kafala system (sponsorship), and the main players in the region, are presented in relation to the share of domestic and foreign labor. Finally, the authors discuss one of the strategies that the governments of the region call nationalization, which aims at replacing foreign labor with national labor.

2 JEL codes

J15 · J18

F. Ahmadi (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

Introduction

Methodology

The need to study the socio-economic development of the GCC countries at the national level for each country and the region as a whole in the twenty-first century is emphasized in the works (Shkvarya & Frolova, 2017; Shkvarya et al., 2019). This topic has been worked out in the literature quite deeply, and the authors emphasize that the GCC countries currently provide socio-economic dynamics due to two factors: the export of hydrocarbons and the attraction of foreign labor migrants. However, in practice, the GCC countries seek to

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_87

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increase the number of employed among citizens, including by escalating the educational level. The historical aspects of the increase in the number of migrant laborers in the GCC countries are emphasized in the works (Dito, 2010; Tétreault, 2008; Winckler, 1998, 2009). Based on previous research and the comparativeanalytical method, this research has been able to present a clearer picture for further and practical research.

3

Results

In 2019, according to the Economic Affairs’ Population department of UN Division program, there were more than 10% of all migrants globally, while the Kingdom of Saudi Arabia and the UAE hosted, respectively, the third and fifth biggest migrant societies in the globe. Foreign nationals are a major part of the inhabitants in Bahrain, Qatar, Kuwait, and the UAE (and above 80% of the population in the UAE and Qatar). The relativity of migratory workers in the employed population in the golf region states are among the uppermost in the world, with a median range of 70.4%, ranging from

57% to 95% for individual countries (World Bank, 2004). Table 1 shows the amount of national and migratory laborer in the Golf region along ratio of each of them in the total amount of labor. Nowadays, about (54.4%) of migrant laborer in the Golf states are employed by the Kingdom of Saudi Arabia (KSA), while the governments of Kuwait and Qatar account for approximately 67% of the other half of the GCC labor force. The contribution of women in the workforce market of the GCC countries is 25.5%, and, subsequently, the number of women present in the foreign labor force is slightly higher than 9%–22% in the countries of Saudi Arabia and Kuwait, respectively. As of 2020, the total female foreign workforce in the GCC was 12.5% (International Labour Organization (ILO), 2022).

4

Labor Market of the GCC

All GCC countries are importers of labor, and this is due to the similarity of the economic activities of these countries, which is oil exploitation. The specifications of the workforce

Table 1 National and foreign labor force of GCC, 1980–2020 KSA

Kuwait

Bahrain

Oman

Qatar

UAE

Total

National Foreigners Total Foreigners, % National Foreigners Total Foreigners, % National Foreigners Total Foreigners, % National Foreigners Total Foreigners, % National Foreigners Total Foreigners, % National Foreigners Total Foreigners, % National Foreigners Total Foreigners, %

1980 1440 2662 4102 64.9 126 544 670 82.1 73 101 174 58.5 167 300 467 64.2 18 156 174 89.7 72 612 684 89.5 1896 4375 6271 69.8

1990 2061 3065 5127 59.8 125 778 904 86.1 107 111 219 51 163 382 546 70 23 257 281 91.6 100 835 935 89.3 2587 5424 8012 67.7

2000 2712 3567 6280 56.8 170 809 980 82.6 109 195 305 64.2 292 489 781 62.7 39 313 353 88.7 155 1613 1769 91.2 3726 6741 10,468 64.4

Source: Compiled by the author based on GCC-STAT (2021) and World Bank Data (2022)

2010 4787 5145 9933 51.8 223 1395 1619 86.2 160 551 712 77.5 358 1087 1446 75.2 74 1334 1409 94.7 674 5186 5861 88.5 6944 14,035 20,980 66.9

2020 6828 9162 15,991 57.3 3.22 19.88 2310 86.1 255 717 972 73.8 578 2073 2651 78.2 109 2065 2174 95 637 5738 6376 90 9935 20,539 30,474 67.4

Female% in 2020 22.4 9.1 14.7 57.5 22.4 27.3 30.7 16.7 20.4 33.3 12.8 17.3 36.4 12.7 13.9 45.7 21.5 16.7 25.5 12.5 16.7

Labor Migrants in the Economy of GCC Countries: History, Modernity, Problems, and. . . Table 2 Labor force participation rates in the GCC, 2020, by citizenship category (%)

Saudi Arabia Kuwait Bahrain Qatar Oman UAE

Citizens 42.7 13.9 26.2 5 17.8 10

501 Non-citizens 57.3 86.1 73.8 95 78.2 90

Source: arranged by the author originated from (GCC-STAT, 2021; World Bank Data, 2022) 42.7 is the highest and 5 is the lowest

market in the GCC countries include low labor force participation rates, the division of the labor market into different sectors (public/private, insider/outsider jobs), the dominance of the service sector in the labor market, and the kafala system (International Labour Organization (ILO), 2022). The ILO and World Bank do not offer a balance of national and foreign labor force participation. The GCC-STAT recently published a report on the workforce in Golf countries (excluding UAE). Table 2, prepared by calculating data from Table 1, shows that the percentage of national labor force participation varied from 5% in the Qatar labor market to 42.7% in Saudi Arabia in 2020 (Carvalho et al., 2017; GCC Statistical Center, n.d.). In Golf countries, the labor market is divided into two categories. The first part consists of privileged national citizens who work in government (public sector) with high salaries. The second consists of immigrants working in the free market (private sector) with limited salaries (International Labour Organization (ILO), 2022). The skills of the GCC national workforce do not match the needs of the private sector. Citizens often have no key skills required for the private sector. Furthermore, benefits and incomes of the private sector are significantly lower than in the government sector, and short-term contracts and low job security in the private sector reduce the desire of citizens to work in this sector. However, regional governments have policies to escalate the range of national participation, which we will address later (Carvalho et al., 2017). Persian Gulf Cooperation Council nationals, they prefer to work in government offices. This is because of the benefits of a government job, which includes shorter work hours, higher pay, and higher safety compared with the private sector. (International Labour Organization (ILO), 2022). Thereby, there is little inspiration for applying in private sector. Nowadays, approximately 65% of the national workforce in the GCC countries (excluding UAE) is holding down a job in the public sector (Herb, 2009). In addition to the government and market sectors, the workforce market in the GCC countries has another categorization based on the insider and outsider labor force. Insider jobs are mostly related to the public sector and permanent employees whose jobs are protected by turnovers and have access to welfare mechanisms of only-citizens. Outsider jobs

include employees with short-term contracts, low job security, and low wages, which are largely related to the private or informal sectors (GCC Statistical Center, n.d.). The private-sector labor force enjoys government benefits such as national employment quotas, citizen subsidies, unemployment benefits, and training benefits. However, they must compete with an almost unlimited number of workers whose wages are set in some countries such as Pakistan, India, or the Philippines—a situation that qualitatively sets the GCC labor markets above all other labor markets in the world (Randeree, 2012). The fiscal deficits in the GCC region have led governments to reduce the recruitment of new government employees drastically. Nevertheless, the existing benefits have remained largely intact. The victims of this dualization in the labor market (insiders/outsiders) among the GCC citizens are mostly young people, women, and people with lower skills (Al-Hasan, 2012). Two economic sectors have been developed in the Gulf countries. The first is the energy sector, including both fossil fuels and renewables. The second sector is non-oil. Each dimension has its own characteristics and sections (Valeri, 2015). Accordingly, the main occupations that the GCC countries engage in are similar across the region. Sponsorship system or Kafala regulate the relationship of migratory workers and their local sponsors (Kafeel), who is usually work for them. This system was created in Persian Gulf countries, as well as in Lebanon and Jordan (Dito, 2010). Based on this system, the government allows native individuals or firms to hire and sponsor non-national workforce (excluding Bahrain, where government sponsorship authority a work instead of an employer). The sponsor pays for travel expenses and provides hostel. Sponsors occasionally use private agencies inside the origin countries of applicants to find workers and make possible their entry into the country instead of hiring one person directly (GCC Statistical Center, n.d.). Since the Kafala system is under the authority of the Ministries of the Interior affairs instead of Ministry of Labor, the laborer has any protection including in the labor law of the country of residence. This makes them vulnerable, increases the possibility of their abuse and deprives them of rights such as the right to participate in labor discussions or membership in labor unions (Castles &

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Miller, 2009). Furthermore, because work visas and worker residency are linked, and only sponsors can extend or terminate them, the system gives citizens—not the government— control over workers’ legal status, creating a power disbalance. Therefore, sponsors can benefit from it. Mostly, laborers need a permission from their sponsor in order to alter jobs, end work, and set foot in or leave the country of hosting. Leaving the work without permits is a crime and determine the legal status of worker and imposes the chance of imprisonment, even if the worker is running away from abuse. Workers do not have enough recourse in the face of misuse, and many experts impose as the system leads to modern slavery (Global Bankers Institute, n.d.). The immigration policy and practice of the GCC countries have been adopted independently and, in some cases, contradict international policies and realities. The GCC countries have tried to, directly and indirectly, control migration, minimize the chance of integrating emigration and socioeconomic privileges, apply discriminatory expulsions, restrict citizenship routes, and implement “nationalization” plans to strengthen the participants of citizens in the workplaces (Osman, 2013). Initially, the Kingdom of Saudi Arabia in 2003 declared “Nitaqat law” (The Project on Middle East Political Science (POMEPS), 2021). By 2013, the country intended to reduce the number of immigrant workers and their dependents by 20% (Herb, 2009). This immediately led to the registration of forgery Saudi employees by companies in order to increase the “Saudization rate” in their firms. These employees (mostly Saudi women) were compensated using their names and reputation (Al-Hasan, 2012). Kuwait has been aggressive in its pursuit of “Kuwaitization” in recent years. The country announced 100% of Kuwaitis are employed in 13 of the 16 public sectors after the dismissal of migrant workers from their positions in 2017 (Babar, 2015). Moreover, Kuwait announced new law of immigration that would oblige millions of migrants, including 800,000 Indians, to leave their jobs (Herb, 2009). In addition to these policies, government used the coronavirus pandemic to make the process faster by not extending the visas of 70,000 residents currently stranded abroad. These dramatic measures have led to 1.4 million citizens (90%) of Kuwaitis occupying sector of public services, up from 81% in Q2 2019 (Carvalho et al., 2017). In Kuwait, there is a rule that 60% of employees in private banks, 56% of employees in corporate companies, and 40% of marketing companies must be Kuwaitis. Moreover, the oil industry and private refineries are required to employ citizens as 30% of their employees (Arab Times, 2019). In the UAE, quotas in the banking sector are set for UAE nationals. However, not all banks complied with this quota in the division of labor and were fined for violating the labor law. The UAE has further advanced Emiratization by encouraging enterprising companies such as telecommunications provider

F. Ahmadi

Du. The UAE has mandate those public sector jobs to be limited for native UAE workers to force nationals choose private sector for occupation (Arab Times, 2019). In Oman, non-nationals proportion is the lowest amidst the region state as the “Omanization” plan began far earlier in 1995 (Louër, 2015). The government has also subsidized jobs in case of hiring local staff to decrease reliance on migratory workers gradually. Bahrain as well, has taken steps to localize itself, called “Bahrainizaton”. The Labor organization and Market Regulatory Authority hired a Bahraini for four migratory workers. Firms that fail to implement this policy will be fined for not approving their foreign worker’s visa (Global Bankers Institute, n.d.).

5

Conclusion

This research discusses the history of labor migrants and the trend of changes in the workforce market of the GCC countries and argues the ongoing state of the labor sector in the economy of the Gulf region, including such issues as low demand for labor participation and different types of classifications. The research continues to debate the differences between the migrant and national labor force and the kafala system and its advantages and disadvantages. Each item is described with statistics, tables, and figures. Finally, the research provides some facts about the response of the GCC countries to the high level of migrant labor and its consequences. One of the measures to reduce foreign labor and replace it with domestic labor was the nationalization of the labor market.

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Labor Migrants in the Economy of GCC Countries: History, Modernity, Problems, and. . . GCC Statistical Center. (n.d.). Labour. Retrieved from www.gccstat. org/en/statistic/statistics/labour (Accessed 10 April 2022). GCC-STAT. (2021). Labour statistics in the GCC countries for the first quarter. Retrieved from https://gccstat.org/images/gccstat/docman/ publications/Quarterly_Report_on_labour_Statistics_in_the_GCC_ Countries_-_First_Quarter_of_2020.pdf (Accessed 10 April 2022) Global Bankers Institute. (n.d.). Training in the Middle East. Retrieved from http://globalbankersinstitute.com/Articles/Training_in_the_ Middle_East.pdf (Accessed 10 April 2022). Herb, M. (2009). A nation of bureaucrats: Political participation and economic diversification in Kuwait and the United Arab Emirates. International Journal of Middle East Studies, 41(03), 375–395. https://doi.org/10.1017/S002074380909148X International Labour Organization (ILO). Labour migration (Arab States). Retrieved from https://www.ilo.org/beirut/areasofwork/ labour-migration/lang%2D%2Den/index.htm (Accessed 10 April 2022). Louër, L. (2015). The Arab Spring effect on labor politics in Bahrain and Oman. Arabian Humanities, 4. https://doi.org/10.4000/cy.2865 Osman, D. (2013, September 8). Arab migrant communities in the GCC Working Group I. Retrieved from https://cirs.qatar.georgetown.edu/ event/arab-migrant-communities-gcc-working-group-i/ (Accessed 10 April 2022). Randeree, K. (2012). Workforce nationalization in the Gulf Cooperation Council States. CIRS Occasional Papers. DOI: https://doi.org/10. 2139/ssrn.2825910.

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Shkvarya, L. V., & Frolova, E. D. (2017). Transformations in socioeconomic development of the Gulf group states. Economy of Region, 13(2), 570–578. https://doi.org/10.17059/2017-2-21 Shkvarya, L. V., Aidrous, I. A. Z., Ruzina, E. I., Savinsky, A. V., & Rodin, S. I. (2019). Development of high-tech segment in the GCC region on the example of the aviation component of the Kingdom of Bahrain. IOP Conference Series: Materials Science and Engineering, 476, 012025. Tétreault, M. A. (2008). The political economy of Middle Eastern oil. In J. Schwedler & D. Gerner (Eds.), Understanding the contemporary Middle East (pp. 255–279). Lynne Rienner. The Project on Middle East Political Science (POMEPS). (2021). Labor and politics in the Middle East and North Africa. POMEPS Studies No. 45. Washington, DC: Elliott School of International Affairs. Retrieved from https://pomeps.org/wp-content/uploads/2022/01/ POMEPS_Studies_45_Web.pdf (Accessed 10 April 2022). Valeri, M. (2015). The Suhār paradox: Social and political mobilisations in the sultanate of Oman since 2011. Arabian Humanities, 4. https:// doi.org/10.4000/cy.2828 Winckler, O. (1998). Demographic developments and population policies in Kuwait. Moshe Dayan Center, Tel Aviv University. Winckler, O. (2009). Arab political demography (2nd ed.). Sussex Academic Press. World Bank. (2004). Unlocking the employment potential in the Middle East and North Africa. World Bank. World Bank Data. (2022). Labor force, total. Retrieved from https:// data.worldbank.org/indicator/SL.TLF.TOTL.IN (Accessed 10 April 2022)

Titulature in the Text of the Epic “Manas” and “Babur’s Notes” as a Source of Information About the Social Institutions of the Central Asian Region Siuita R. Abdykadyrova , Gulipa A. Madmarova, Zamira M. Sabiralieva Gulzat J. Bolotakunova, and Chynarkan A. Gaparova

Abstract

JEL codes

The paper studies the titulature in the text of the epic “Manas” and “Babur-name,” written by Zahiriddin Muhammad Babur, an outstanding statesman and a remarkable poet. According to the totality of information and their reliability, “Manas” and “Baburnama” are considered the most important and most valuable historical works, which have no equal among similar works written in the Middle Ages in Central Asia, Iran, Afghanistan, and India. The interest in this work is confirmed by the fact that it has been translated into many languages of the world. This served as the basis for choosing the topic, object, and subject of this research. The research aims to establish semantic, stylistic, and functional features and the process of forming the considered terms-names in the works “Baburnama” and “Manas.” The scientific novelty of this research lies in the study and comparison of titles, epithets, and honorary titles in these texts, which was done for the first time. The work uses a comprehensive methodology, including descriptive, functional-semantic, and comparative-historical methods. The research identifies and describes the linguistic picture of the world of the regions of Central Asia. The following specific tasks were solved: a collection of titles by texts and classification by lexico-semantic groups preserved in one version or another in the languages of the peoples of the Central Asian region. The results of this work can be used in the study of the general fund of Turkic languages and the ethnographic past of the Turks.

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Keywords

Components · Name · Title · Turkic · Region · Language · Text · Ruler · Power S. R. Abdykadyrova (✉) · G. A. Madmarova · Z. M. Sabiralieva · G. J. Bolotakunova · C. A. Gaparova Osh State University, Osh, Kyrgyzstan e-mail: [email protected]; [email protected]

1

,

Introduction

When researchers speak about the title, they proceed from the opinion about the continuity of the traditions of the “ancient Turkic statehood” from the nomadic political formations of previous eras and advocate the existence in the Turkic Khaganate of a “strict hierarchy, according to which the place in the system of public relations and the political weight of a member of society was determined by his title. Each ethnic group at a certain time had its own titles; that is, there was a certain register of titles. The Turks, who had their own developed system of governance and titles, were no exception. G. B. Babayarov and A. Kubatin, in the study “Ancient Turkic titles and epithets on Sogdian coins of Central Asia of the early Middle Ages,” note: “The titles inherent in the ancient Turks were distributed not only in the center of the khaganate, but also in neighboring territories, such as Semirechye, East Turkestan, Central Asian Mesopotamia, but also on its outskirts—Kabulistan, Khorasan, North Caucasus, etc.” (Babayarov & Kubatin, 2016). The time of the appearance of ancient Turkic titles and terms in the historical arena and their consolidation in written sources are among the urgent problems of the history of the Turkic Khaganate (552–744) and all Turkic peoples. Many scholars have studied titles in Turkic languages. V. V. Radlov devoted his work “Titles and names of the Uighur khans” to the study of the features of the titles and names of the Uighur khans (Radlov, 1891, pp. 265–270). The interpretation of the meanings of names is contained in the work “History of the study of Turkic languages in Russia” by A. K. Kononov (1982). Many meanings can be found in the article “About the Turkic elements of the Russian dictionary” by D. K. Dmitriev (1958). A. K. Borovkov’s study “Vocabulary of Central Asian tefsir of the XII–XIII centuries” also played an

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_88

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important role in studying Turkic titles (Borovkov, 1963). In our opinion, the Kyrgyz-Russian dictionary of K. K. Yudakhin is a significant result of more than 40 years of painstaking work and the author’s activity in collecting and researching, compiled considering the achievements of contemporary Turkic lexicography (Yudakhin, 1985). Of great importance for the study of titles in the Turkic languages is the work “Ozshturulgon sozdor” (Borrowed words) by another well-known lexicologist K. Karasaev (1986), published in 1986. The meanings of many names and words close to them in meaning have been clarified and restored in the following works: • “Collection of information about the peoples who lived in Central Asia in antiquity” by N. Ya. Bichurin (1950); • “Ancient Turks” by L. N. Gumilev (1967); • “Ceremonial at the court of the Uzbek khans in the 17th century” by V. V. Bartold (1964); • “Tajiks: The most ancient, ancient, and medieval history” by B. G. Gafurov (1989); • “The Rulers of Asia” by E. I. Kychanova (2004). In the work “Titulature in the language of the Kyrgyz epic Manas,” A. Zh. Sheriev studied the features of the use of titles and the correlation between epithets and stateadministrative terms (Sheriev, 1991). It is also appropriate to pay attention to the following works: • Dictionary “Divan lugat at-turk (A set of Turkic words)” by M. Kashgari (2010), where medieval term names are recorded; • “Ancient Turkic Dictionary” edited by D. M. Nasilov et al. (1969); • “The origin of the Turkish “runic” alphabet” by G. Clauson (1970); • “Materials on the historical phonetics of the Turkic languages” by A. Ryasyanen (1955); • “Introduction to Altai linguistics. Morphology” by G. I. Ramstedt (1957); • “Languages of the Huns, Danube and Volga Bulgarians” by Benzing I. (1986). Thus, from a theoretical analysis of the literature, we see that this problem has been considered quite widely.

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Materials and Methods

The epic “Manas” and the historical work “Baburnama” occupy a special place in the history of the Turkic-speaking peoples as priceless literary monuments of cultures. A number of issues related to the study of names remain practically undeveloped in the text of Babur’s Notes; studies of the

Baburnama text in linguistic terms are practically absent. This determines the relevance of our work. As a material for research, we took the titles presented in the Baburnama and the epic Manas. The main purpose of the work is to compare titles, epithets, and honorary titles in the epic of the language “Manas” and “Baburnama.” Functionalsemantic, descriptive, and cultural-pragmatic research methods were used in the work.

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Results

The prototype of the name in the East consisted of several elements. In the work “Terminology of kinship in the work of Mahmud Bulgari “Nahj al-Faradis,” F. Sh. Nurieva and I. R. Galiulina say that “the first name was given in infancy (at birth or circumcision), his father’s name was added to it; then he could receive a title corresponding to his social status, or nicknames, reflecting his personal qualities or describing his appearance” (Nurieva & Galiulina, 2012). Titles, names, and nicknames were never used when addressing one person at the same time. A significant part of their changing variants reproduces only those names by which people were known to their contemporaries and which have survived to the present day. Further, to clarify the general direction of our research, it is necessary to explain the concept of “title” used in the work. The term “title” (from Lat. titulus—inscription, honorary title) implies not only the names of the highest state, sovereign, hereditary, and ancestral honorary titles of the elite of society (that is, a title in a narrow, proper sense) but also the names of someone by occupation, social status, or any distinctive features. That is, the title in the broad sense of the term includes the following: • An honorary title of a sovereign or a family, requiring an appropriate title (imperial title, princely title); • The name of someone, something (usually high, honorable) by occupation, social status, or some distinctive features; • The name of any position and rank (Evgenyeva, 1999, p. 239). In addition to many other factors, the political significance of a particular country was largely determined by the title, namely the honorary title of the person who stood at the top of this country. Titles were hereditary, passed from father to son, etc. They were also acquired during power struggles with other persons of equal rank. As we see, the term title implies an honorary, possessive, generic title or the name of some kind of position. The epic “Manas” and “Babur’s Notes” are just the same, very rich in lexemes used as titles, ranks, honorary epithets, and titles of a large circle of actors

Titulature in the Text of the Epic “Manas” and “Babur’s. . .

in the epic tale. Many of them are still in use in the language of the peoples of the Central Asian region.

3.1

The Title in the Text of the Epic “Manas”

The epic “Manas” is a real masterpiece of oral folk art of the Kyrgyz people. It is known all over the world, first of all, for the fact that this is the most voluminous work among all known epics. The narrative of the epic includes all aspects of the life of the Kyrgyz people, their worldview, and ideas about the world around them. The epic provides us with a rich idea of the economy, everyday life, customs, and relations with the environment. From it, we get an idea of the ancient Kyrgyz, geography, religion, medicine, philosophy, ethics, and aesthetics. Terms that have lost their titular meaning and passed into other categories of vocabulary are also attributed here; that is, in the distant past, they were ranks and positions of senior servants in the state administrative hierarchy (Sheriev, 1991). In the epic “Manas,” honorary epithets, nicknames and titles of characters, names of mythical patrons, magicians, and animal husbandry associated with the religious beliefs of the Kyrgyz are included in the body of the title. For example, the word “er” in the epic means a man who had the official status of a feudal lord. In the ancient Yenisei script, this word is the most common. This term can be translated not only as “husband” or “hero” but also, highlighting its social content, as “knight.” According to the epic “Manas” in Altai, only the elder of the Kyrgyz, Eshtek, has the title “er: “Nogoydon kary er Eshtek” (er Eshtek is older than the nogoy). Manas’s title “er” was first noticed during the first campaign of the Kyrgyz troops from Altai to their native Turkestan. Apparently, he was awarded such an honorary title after the first major victory over Tekes Khan, the head of the Kalmyks (Oirats) (Eshiev, 2019). Parallels and analogies in historical sources to the title of “er” can be seen in the Old German and Old Norse title “earl.” In early medieval England, earl were the ancestral nobility; since the ninth century, earl corresponded to the concept of “count.” The Latin heros, the Old Norse erl, and the Herodotus “eor” and the epic er could have an identical etymological nature.

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Baburnameh, Zahiriddin Muhammad Babur, went down in history in his short life not only as a commander and founder of the Great Baburid state in India but also as a scientist and poet who left a rich creative legacy. Babur was well versed in the socio-historical situation in the Central Asian region, where he was formed as a ruler, poet, writer, and historian. A special place in Babur’s work is occupied by an invaluable literary monument of prose in the Old Uzbek language—the historical work “Baburnama.” This book is mainly autobiographical and reflects the history of the peoples of Central Asia, Afghanistan, and India of the late fifteenth–early sixteenth centuries. The interest in this work is confirmed by the fact that it has been translated into many languages of the world. Babur’s narrative uses many titles, which are repeated very often. The most frequent titles are mirza, khan, bikim, khanum, sultan, khan, and bek. The titles padishah, emir, tarkhan, etc. are less frequent. One of the most frequent in the text is the title mirza. Mirza/murza/myrza is a title that in the Golden Horde and in the Crimean Khanate was given to representatives of noble families. If this title was in a preposition in relation to the proper name, it meant the same as in the Russian language the word lord; if the title is in a postposition to the proper name, it has the meaning “duke,” “prince” (comp. From two words amir < arab. “duke” and zada < persian, “son”; amir zada— letters, “the duke’s son” (Baskakov, 2010). The title mirza is used in Babur’s text with several meanings: as the title of the ruler, as the title of high-ranking officials, and as the general name of the nobility. If the author writes the word mirza with a capital letter without adding a name, we are talking about the ruler of a country invested with real power. When Omar Sheikh Mirza called Yunus Khan for the last time, he gave him the Tashkent region, which at that time was in the power of Omar Sheikh mirza (Babur, 1993).

In this case, the prefix mirza indicates the noble origin of Omar Sheikh and that he is the ruler of the lot. Usually, Babur’s title mirza refers to the Turkic rulers, in contrast to the title Khan, which is mostly referred to as Mughal lords. . . . We learned that the Mirzas were facing each other, and sent forward Tulun Khoja Mughal with two or three hundred dashing Yigits (Babur, 1993).

Here, it is meant that the mirzas are representatives of the noble estate, the retinue of the ruler.

3.2

The Title in the Text of “Baburnama”

Next, let us pay attention to the body of the title in the text of the work “Baburnama.” According to the totality of information and their reliability, “Baburnama” is considered the most important and most valuable historical work, which has no equal among similar works written in the Middle Ages in Central Asia, Iran, Afghanistan, and Persia. The author of

Khub Nigar khanum’s son was Haidar mirza (Babur, 1993)— meaning Babur’s cousin. In this case, mirza means prince, the son of the ruler.

It is also noteworthy that Babur never names rulers and their descendants without a respectful title: Sultan Ahmed Mirza, Khanzade bikim, Khurram Shah, Sheibani Khan, Janibek Sultan, Timur bey, etc.

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In the case when Mirza is written without a proper name and with a capital letter, this means that we are talking about a ruler endowed with real power and a throne: When Mirza (Sultan Hussein) celebrated the circumcision of my son Muhammad Mumin mirza, he gave him (Astrabad) (Babur, 1993).

Here we are talking about Sultan Hussein, who was the ruler of Samarkand and Babur’s uncle. Some Yigits, showing haste, asked for permission to fight, but Mirza said: “It’s already night” and did not allow it (Babur, 1993).

Here we are also talking about Sultan Hussein. Nevertheless, the title mirza never denoted the supreme ruler invested with royal power. Most of the Timurids in Babur’s time were rulers of relatively small estates, which is not surprising since there were a large number of them. This gave rise to internecine wars: everyone wanted to grab a bigger and richer territory. Babur also called himself Mirza before he subdued Hindustan: Until then, the descendants of Timur, although I had the royal power, called me “mirza.” Now (in Hindustan) I ordered to call myself Padishah (Babur, 1993).

In its original meaning, this word goes into the category of historicisms. It is well known that this title has many equivalent meanings, such as commander, leader, or ruler. Initially, the khans headed only relatively insignificant tribal possessions. The title Khan is on a par with the Arabic title akim—“ruler” and the Turkic uluk—“lord, ruler.” Synonymous with the title “khan,” other titles are also used: sultan, myrza. As the highest title of the lord, Khan is part of the proverbial phraseology of the Kyrgyz: • Kalk tutkasy kan bolot, • Kazat uluu zhol bolot (Karalaev, 1981). • The support of the people will become a khan, and the War will be a great campaign. In the modern Kyrgyz language, the title Khan is widely used, including in various national games, proverbs and sayings, fiction and folklore, etc. However, it should be noted that in the modern Kyrgyz language, there is a development of new meanings with simultaneous adjectivation of the term. In the southern dialects of the Kyrgyz language, there are combinations: Khan atlas—“the best atlas,” Khan bazaar—“the best bazaar” (with some shade of sanctity “sacred bazaar”), for comparison—in the Mongolian language khan—khas—“the best jasper.” In the epic “Manas,” two phonetic variants are used: khan and kan. In the same forms, it is recorded in the ancient Turkic dictionary of D. M. Nasilov et al. (1969).

S. R. Abdykadyrova et al.

If compared with European cultures, mirza “prince, heir to the throne,” or “head of the beks” corresponds to the European title—“duke, prince” (second rank of the bek): khan corresponds to the European title count (third rank of the bek). As can be seen from the above lists, with the long existence and gradual complication of the rank hierarchy, the once highest Turkic title passes into the category of lower ones. This situation may also have a historical background and is associated with the loss of the influence of the Turkic rulers in the new ethnopolitical associations. Thus, we see that the title khan—kan in the epic “Manas” is used as follows: 1. 2. 3. 4.

The title of the supreme ruler of tribes and peoples; The title of the leader of a small tribe or tribal association; Anthropoformant—an honorary prefix to their own wives; An epithet, the honorary name of the characters who really do not have this title.

Along with frequent titles, rare titles and epithets are also used in the epic. Among the frequent titles can be noted Sultan, akim in the meaning of ruler, lord. This also includes honorary nicknames and feudal titles bek, biy, er, baatyr, kankor, etc. One of the rare epithet titles in the epic is zayyppurush, which means “famous (an epithet attached to the most famous epic heroes, e.g., Manas, Rustem, etc.). In K. K. Yudakhin, we see this word as zyyyppurush—famous, according to the researcher, going back to a complex word from the Arabic sahib—owner, possessor and Persian, / farasat/insight/shrewdness (Yudakhin, 1985). However, the last component is not quite suitable from a phonetic and semantic point of view. Thus, we assume that the second part of the word purush goes back to the Persian pur: (1) son; (2) the second component of compound words (usually with proper names and titles) with the meaning of son, for example, aahpur (a) the son of the shah, prince; (b) the masculine proper name Mahpur (Persian). If we assume that pur is a truncated form of purush and raise this part to the Sanskrit puriza-puruka (1) man, man; (2) hero; (3) servant; (4) the human race (Skt.), then we can conclude from all of the above that the title-epithet zayyppurush—Sayyip-purush in the epic consists of two components: Arabic and Persian, which, in turn, goes back to Sanskrit. Hence, the literal meaning of zaiyppurush in Persian and Arabic is “son of the Lord”; in Sanskrit—“lord of heroes” or “lord of men.” Just as in the epic “Manas,” in Babur’s text, the title Khan can act in the meaning of “ruler” or “prince.” Sheibani Khan, although he was not his (Abd al-Ali Tarkhan) nuker, however, he was with him several times, and many sultans are Sheibanids, small and the great ones were his nukers (Babur, 1993).

Titulature in the Text of the Epic “Manas” and “Babur’s. . .

In this case, the term khan means a “ruler.” Dreaming of going to Andijan, I went to Tashkent to the Khan to ask him for help (Babur, 1993).

Khan with a capital letter without a proper name also denotes a ruler with real power and a throne. Sometimes, Babur also uses derivatives of this term: The Khan appointed his son, Sultan Mahmud Khanike, to march on Samarkand, as well as Ahmad bey with four or five thousand troops . . . (Babur, 1993).

In this case, Khanike is the prince, the khan’s son. The same applies to women’s titles. The titles bikim and khanum indicated the high origin of the woman. • “The other five daughters (Sultan Mahmud Mirza) were from Khanzade bikim, the granddaughter of Mir Buzurg” (Babur, 1993). • “The oldest was Mihr Nigar khanum, which Sultan Abu Said Mirza left for his eldest son, Sultan Ahmed Mirza” (Babur, 1993). If the titles Khanum or Bekim are written without a proper name and with a capital letter, then they indicate the khan’s mother, his aunt, etc. The fortieth anniversary of Khanum (my parent) was approaching when the mother of the khans Shah bikim arrived from Khorasan . . . (Babur, 1993).

Sultans, shahs, emirs, and beks Babur calls noble nobles, owners of small estates consisting of rulers. The sultans of Samarkand always declare it (the plain) a nature reserve, every year they go to this clearing and live there for a month or two (Babur, 1993).

In the countries of the Muslim East, emir means the title of a military commander, ruler, and a person bearing this title [Arabic. “amir”]. The emirs of Babur are notable people, notable people. Mentioning any ruler, he always talks about the emirates that were under his hand. Thus, the titles Sultan, emir, bek, mirza, and Shah in Babur’s time were not titles of supreme rulers. As is known, emir/amir was the title of Tamerlane, who went down in the history of Central Asia as Amir Timur Guragan. It was Timur’s personality that gave importance to this title, which later, like the titles of shah, Sultan, could act as titles of supreme rulers (emirs of Bukhara, Ottoman sultans, Iranian shahs). The title mirza, on the contrary, will become a name denoting a noble origin. As we have already noted above, mirza/myrza/murza is a polite address to a man in modern Kyrgyz, Kazakh, Turkish, and Tatar languages.

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Conclusion

In our work, we have done only a small part of the work on the study of names in the epics “Manas” and “Baburnama.” Nevertheless, the results of our analysis allow us to draw some conclusions of interest to our research: these techniques of the author broaden the reader’s horizons, informing about many customs of the past. The titles in the work “Manas” and “Baburname” imply not only the highest state, sovereign, hereditary, and ancestral honorary titles of the elite of society, that is, a title in a narrow, literal sense, but also the name of someone from the profession, social status, according to some distinctive features. The corpus of titles “Baburnama” and “Manas” includes honorary epithets, nicknames, and titles of characters associated with the traditions of the Turks and Mongols, associated with the Persian language, and even Sanskrit. This also includes terms that have lost their titular meaning and have passed into other categories of vocabulary; that is, in the distant past, these were ranks, titles, and positions of senior officials in the state administrative hierarchy during Babur’s time. The names in the text of the works studied by us indicate that the peoples of Central Asia have a common past, a similar mentality and worldview, which is reflected in a certain way in the language. We hope that the proposed study will provide theoretical and practical assistance in studying the language of written monuments of Turkic culture, as well as the linguistic picture of the world of the Central Asian region. The research results can be used in theoretical courses on lexicology, intercultural communication, cognitive linguistics, and comparative linguistics.

References Babayarov, G. B., & Kubatin, A. V. (2016). Ancient titles and epithets on the sogd-language coins of Central Asia of the early Middle Ages. The World of the Great Altai, 2(4–2), 897–917. Retrieved from http://rmebrk.kz/magazine/5484# (Accessed 18 April 2022). Babur, Z. M. (1993). Babur-nameh: Babur’s notes (2nd ed.). Institute of Oriental Studies of the Academy of Sciences of the Republic of Uzbekistan. Bartold, V. V. (1964). Ceremonial at the court of the Uzbek khans in the 17th century. In Works on individual problems of the history of Central Asia (Vol. 2, Part 2). : Nauka. Baskakov, N. A. (2010). Turkic languages (4th ed.). LKI Publishing House. Benzing, I. (1986). Languages of the Huns, Danube and Volga Bulgarians. In A. N. Konov (Ed.), Foreign Turkology (Vol. Issue. 1, pp. 11–28). Nauka. Bichurin, N. Y. (1950). Collection of information about the peoples who lived in Central Asia in antiquity. Publishing House of the Academy of Sciences of the USSR.

510 Borovkov, A. K. (1963). Vocabulary of the Central Asian tefsir of the XII–XIII centuries. Publishing House “Oriental Literature”. Clauson, G. (1970). The origin of the Turkish “runic” alphabet. Acta Orientalia No. 32, Copenhagen, Denmark. Dmitriev, N. K. (1958). About the Turkic elements of the Russian dictionary. In Lexicographic collection (Vol. Issue 3, pp. 503–569). Institute of the Russian Language of the USSR Academy of Sciences. Eshiev, A. M. (2019). Epic title of Er and historical analogies (husband, earl, hero, heros, eor). Eurasian Scientific Association, 11-6(57), 461–463. https://doi.org/10.5281/zenodo.3572850 Evgenyeva, A. P. (Ed.). (1999). Dictionary of the Russian language. In 4 vols. Polygraph Resources. Gafurov, B. G. (1989). Tajiks: The most ancient, ancient and medieval history (2nd Book). Irfon. Gumilev, L. N. (1967). Ancient Turks. Nauka. Karalaev, S. (1981). Manas. Epic. Kyrgyzstan Publishing House. Karasaev, K. (1986). Ozshturulgon sozdor (Borrowed words). Bilim. Kononov, A. N. (1982). History of the study of Turkic languages in Russia. Nauka. Kychanov, E. I. (2004). The rulers of Asia. Publishing House “Oriental Literature”.

S. R. Abdykadyrova et al. Mahmoud al-Kashgari. (2010). Divan lugat at-turk (A set of Turkic words) (3 vols). Publishing House “Oriental Literature”. Nasilov, D. M., Kormushin, I. V., Borovkova, T. A., & Dmitrieva, L. V. (1969). Ancient Turkic Dictionary. Nauka. Nurieva, F. Sh., & Galiulina, I. R. (2012). The kinship terms in the manuscript “Nahdj Al-Faradis” by Makhmut Bulgari. Journal Modern Problems of Science and Education, 5, 299. Retrieved from https://science-education.ru/ru/article/view?id=6937 (Accessed 19 April 2022). Radlov, V. V. (1891). Titles and names of the Uighur khans (Vol. 5). Imperial Russian Archaeological Society. Ramstedt, G. I. (1957). Introduction to Altai linguistics. Morphology (L. S. Slonim Transl. from German). : Foreign Literature. (Original work published 1952). Ryasyanen, M. (1955). Materials on the historical phonetics of Turkic languages (A. A. Yuldashev Transl. from German; N. A. Baskakov Ed.). : Foreign Literature. Sheriev, A. Z. (1991). Titulature in the language of the Kyrgyz epic Manas (Synopsis of Dissertation of Candidate of Philological Sciences). Institute of Linguistics. Yudakhin, K. K. (Ed.). (1985). Kyrgyz-Russian Dictionary. In two books. Kirghiz Soviet Encyclopedia.

Monohexamethylenetetramine Zinc Iodide Complex Compound for Cotton Growth and Development Stimulation: Advantages in the Labor Market Dilbara T. Altybaeva , Mairam D. Abdullaeva , Nargiza M. Abduraupova , Zhypargul D. Abdullaeva , and Mahira R. Mirzaeva

Abstract

The paper aims to study the expansion of the range of effective stimulants for cotton that increase the yield and maturation of bolls and improve the technological qualities of cotton fiber. The authors apply an isothermal solubility method for synthesizing a complex compound of zinc iodide with hexamethylenetetramine (HMTA). After the isolation of the complex compound into the solid phase, the solubility and specific gravity of the synthesized compound was determined. The chemical bond between nitrogen and carbon atoms was determined by IR spectroscopic method. The thermal stability of the obtained compound was determined by the thermographic method. The study results were practically applied to cotton variety 108-F at the experimental station for cotton growing in the Karasu district of the Osh Region of the Kyrgyz Republic for three years. Cotton was treated with a 0.002% aqueous solution of monohexamethylenetetramine zinc iodide in the flowering phase and again in the fruiting phase. As a result, cotton yield increased by 4.8 metric centners per hectare. The maturation of raw cotton bolls accelerated, and the technological qualities of fiber improved. Keywords

Monohexamethylenetetramine zinc iodide · Growth stimulant · Cotton · Isothermal method · IR spectroscopy

JEL Code

J43

D. T. Altybaeva (✉) · M. D. Abdullaeva · N. M. Abduraupova · Z. D. Abdullaeva · M. R. Mirzaeva Osh State University, Osh, Kyrgyzstan; [email protected]

1

Introduction

Complex compounds exhibit bioactivity that is not characteristic of ligands in the free state. These complexes often have greater activity than the original components, which makes it possible to obtain new, more effective drugs, increase plant growth, and develop stimulants (Basareva et al., 2007). Compounds of hexamethylenetetramine as a ligand are of great interest in the chemistry of coordination compounds. Hexamethylenetetramine readily reacts with many organic and inorganic compounds. Coordination compounds of transition metals with biologically active ligands have a high catalytic activity of redox processes and low toxicity compared to the salts from which they are synthesized (Imanakunov & Lukina, 1984; Mamaturaimova, 2019; Tulenbaeva, 2016). It is proposed to use monohexamethylenetetramine zinc iodide as a stimulator of the growth and development of cotton. The preferred method of treatment with a stimulant is to spray the plant during the flowering and fruiting phases. The processes of complex formation of hexamethylenetetramine with transition metal halides and the products of their interaction have not been adequately studied. Thus, there is an objective need to study the physicochemical properties of the formed compounds and their decomposition products and reveal the regularities of thermochemical transformations of complex compounds. The study of the applied aspect of the synthesized complexes determines the relevance of this research. The study of equilibrium in a ternary aqueous system containing zinc iodide and hexamethylenetetramine was carried out to obtain a new complex compound, establish the concentration limit of its isolation from the solution, study the physicochemical properties of the resulting complex and their decomposition products, and find an applied application of the complex compound monohexamethylenetetramine zinc iodide 1:1. The synthesized ZnI2-(CH2)6N4 complex

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_89

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was tested in the field as growth and development stimulant for cotton (Imanakunov et al., 1975). Hexamethylenetetraamine (HMTA) is a colorless, odorless, and crystalline substance with a sweetish taste that crystallizes under normal conditions from aqueous solutions in an anhydrous form, in the form of rhombic dodecahedrons (Walker, 1957). HMTA crystallizes in a body-centered cubic lattice, the cell parameter of which is a = 7.02 Å; the number of molecules in a unit cell equals 2. The relative density of the crystals is 1.27 g/cm3; bond length C - N = 1.44 ± 0.01 Å, С-Н = 1.17 ± 0.03 Å; distance N. . .H 2.86 Å; hydrogen atoms of neighboring CH2 groups are located at a distance of 2.7 Å from each other; angle C–H . . . N = 106.6 °; Angle C– N–C 107.2°; angle N–C–N 113.6°. This representation of the HMTA structure is supported by X-ray diffraction data (Bril et al., 1940; Kitaygorodsky, 1955; Lobachev, 1953; Sokeu, 1934). When heated in a stream of hydrogen, anhydrous HMTA quickly sublimates in a vacuum and evaporates without noticeable decomposition. In the air, it decomposes at 280 °C; at 450–495 °C, decomposition products char. IR absorption spectra provide information on the mode of coordination of the ligand, the coordinated groups, and the type of chemical bond. In the spectra of polynuclear complexes 3MeH2
2(CH2)6N4
6H2O (Me–Zn, Mn, Co, Ni; G–Cl, Br, I), changes in the characteristic frequencies of (CH2)6N4 are observed, which indicates the presence of a coordination bond between the HMTA molecule and a complexing cation. Metal atoms are linked to each other through anionic bridges.

2

Research Methodology

Phase equilibria in aqueous ternary systems were studied by the isothermal solubility method (Mikheeva, 1985; Novoselova, 1980). Despite the significant laboriousness, this method allows determining the chemical composition of liquid and solid phases, the exact molecular ratio of the reacting components, and, in the case of the formation of compounds, the concentration limits of their isolation. The study of phase equilibria in saturated solutions of the systems was carried out under thermostatically controlled conditions at 25 °C. We used liquid and dry-air thermostats with electric heating. The temperature in them was maintained automatically by a special regulator with an accuracy of ±0.1 °C. Depending on the nature of the reacting salts, temperature, and stirring intensity, the thermodynamic equilibrium of the phases was established within 8–12 h. The moment of onset of equilibrium was controlled by the invariance of the

Fig. 1 Solubility isotherm of the ZnI2–(CH2)6N4–H2O system. Source: Developed by the authors

composition of the liquid phases by chemical analysis (Charlot, 1969; Kreshkov, 1967; Prishible, 1960). Chemical analysis of liquid phases, solid “residue,” and synthesized compounds was carried out for the content of HMTA and zinc ions. The amount of HMTA was determined by the Kjeldahl method from the amount of ammonia formed during acid hydrolysis (Kreshkov, 1967).

3

Results and Discussion

Experimental data on the study of the ZnI2—HMTA—water system indicate the formation of four compounds at 25 °C (Fig. 1). Table 1 shows the compositions of liquid and solid phases in wt. %. Within the concentration range of ZnI2 18.07%–0.63% and, accordingly, (CH2)6N4 1.81%– 12.85%, a congruently soluble compound precipitates from the solution (Table 2). Figure 2 shows the thermogram of the ZnI2
(CH2)6N4 system and residue IR spectrum at 98 °С and 195 °С. HMTA coordinates with other zinc through the nitrogen atom. As a result, the IR spectrum remains unchanged, which is explained by greater rigidity. This indicates that the HMTA molecule is not equally bound to the metal. It is also possible that absorption bands appear due to the presence of a bridge bond between metal ions through anionic bridges.

Monohexamethylenetetramine Zinc Iodide Complex Compound for Cotton Growth and. . .

513

Table 1 Solubility of complex compounds in organic solvents and relative density of crystals Compounds 1 ZnI2
2H2O ZnI2
(CH2)6N4

Mol. mass g/mole 2 319.19 459.19

Mol. mass g/mole 3 4.67 1.99

Spec. Vol. cm3/g 4 0.21 0.50

Vol. mole cm3 5 68.35 230.75

Ethyl Alcohol C2H5OH 6 Soluble Soluble

Acetone (CH3)CO 7 Slightly soluble Slightly soluble

Benzene C6H6 8 Not soluble Not soluble

Tetra chloride carbon CCl4 9 Not soluble Not soluble

Source: Developed by the authors

Table 2 IR spectrum of HMTA absorption bands and complex compound ZnI2
(CH2)6N4 (1:1) No. 1 2

Compounds ZnI2
2H2O ZnI2
(CH2)6N4

v7(C–N) 515 507

v8(C–N) 675, 815 680, 830

v9(C–N) 1010, 1050 1010, 1030, 1070

v10(C–N) 1240 1240, 1260

δH2O 1640 –

Source: Developed by the authors

4

Fig. 2 Thermogram of the ZnI2
(CH2)6N4 system and residue IR spectrum at 98 °С and 195 °С. Source: Developed by the authors

Conclusion

1. The method of isothermal solubility was used to study heterogeneous equilibria in aqueous systems consisting of zinc iodide and HMTA in an aqueous medium at 25 °C. Compounds 2ZnI2
(CH2)6N4
2Н2О, 3ZnI2
2 (CH2)6N4
6Н2О, ZnI2
(CH2)6N4 and ZnI2
2(CH2)6N4 were obtained. A congruently soluble compound ZnI2
(CH2)6N4 (1:1) was selected for testing as a growth and development stimulant. 2. Synthesized compounds were studied for solubility and density determination, thermal stability, and IR spectroscopic analysis method. Based on the data obtained, the main physicochemical characteristics were determined: structure, localization of the chemical bond in the complexes, and density. 3. Using thermal analysis, the thermal stability of the isolated compound ZnI2
(CH2)6N4 (1:1) was studied when heated in air. It has been established that an anhydrous compound is characterized by a polymorphic transformation. The exothermic effect at 400–600 °C is associated with the oxidation of the resulting reaction products. The decomposition of the complex occurs at 98 °C. 4. Field tests of monohexamethylenetetramine zinc iodide ZnI2
(CH2)6N4 (1:1) showed that it stimulates the growth and development of cotton. It increases the yield and technological qualities of the fiber and accelerates the ripening of cotton. 5. The compounds have pronounced bactericidal and bacteriostatic effects. They represent a prospect for developing effective and preventive drugs for medicine and veterinary medicine based on these compounds. 6. Economic efficiency is based on an increase in cotton yield by 5 metric centners per hectare, which contributes to the rapid opening of the bolls, which makes it possible to collect first-class cotton.

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7. Testing the technical properties of the fiber compared to the control increases the length of the fiber by 5 mm.

References Basareva, O. I., Zaikin, A. V., Khapchaeva, D. A., Kostrov, S. V., Bukreeva, E. V., Kalutsky, P. V., et al. (2007). Study of the biological activity of complex compounds of metals with some antimicrobial agents. Kursk Scientific and Practical Bulletin Man and his Health, 4, 5–11. Bril, R., Grimm, N. G., & Herman, K. (1940). Structure and electronic structure of palladium chloride with organic ligands. Uspekhi Khimii [Advances in Chemistry], 8. Charlot, G. (1969). Methods of analytical chemistry (Transl. from French). Chemistry. (Original work published 1961). Imanakunov, B. I., & Lukina, L. I. (1984). Interaction of hexamethylenetetramine with inorganic salts and properties of solid phases. Ilim. Imanakunov, B. I., Yun, P. T., Altybaeva, D. T., Lukina, L. I., Makarov, N. P., Chertkova, V. M., & Yusupova, D. (1975). Copyright certificate for the invention “Growth stimulator and Development of Cotton” (December 27, 1975 No. 469450). State Committee of the Council of Ministers of the USSR for Inventions and Discoveries.

D. T. Altybaeva et al. Kitaygorodsky, A. I. (1955). Organic crystal chemistry: In 2 Vols (Vol. 1). Chemistry. Kreshkov, A. P. (1967). Fundamentals of analytical chemistry. Quantitative analysis (1st book, 4th ed.): Textbook. Chemistry. Lobachev, A. N. (1953). X-ray diffraction study of nitrogen-containing compounds. Proceedings of the Institute of Crystallography of the Academy of Sciences of the USSR, 10(1), 165–171. Mamaturaimova, N. S. (2019). Synthesis, structure and properties of coordination compounds of zinc, cobalt and nickel with hexamethylenetetramine (Dissertation). Osh State University. Mikheeva, V. I. (1985). Method of physico-chemical analysis in inorganic synthesis. Nauka. Novoselova, A. V. (1980). Methods for studying heterogeneous equilibria: Textbook. Higher School. Prishible, R. (1960). Complexons in chemical analysis (2nd ed.) (Yu. I. Vainshtein Transl. from Czech; Yu. Yu. Lurie Ed.). .: Foreign Languages Publishing House. (Original work published 1957). Sokeu, R. W. (1934). Spectgoshetric sheasugeshepts op lehanger, lentetgashine and Ugea. Z. Kgist., 89, 462–468. Tulenbaeva, M. A. (2016). Structure of mixed-ligand complex compounds of cobalt chloride and bromide with hexamethylenetetramine and dimethyl sulfoxide. Science, Technology and Education, 7(25), 28–31. Walker, J. F. (1957). Formaldehyde (Transl. from English). : Goshimizdat. (Original work published 1953).

Assessment of Social Security of the Population of Federal Districts Nadezhda K. Savelyeva

Abstract

The paper aims to verify the hypothesis put forward by the authors and assess the social security of the federal districts of the Russian Federation as an object of research. As part of the research, the authors calculated the index of residents’ social security (IRSS), which considers the criteria of education, health, and income of the population, as well as budget expenditures. The main research methods include the integral method, comparative analysis, synthesis, and correlation analysis. Based on the IRSS value, the authors ranked federal districts according to the level of social security. During correlation analysis, it became necessary to exclude one of the parameters of the index calculation methodology due to a weak correlation relationship. The authors proposed another parameter for the IRSS calculation, which strongly affects the change in the resulting factor. This change did not lead to significant changes in the grouping of federal districts by the level of social security. The research results can be applied in the design of the socio-economic policy of the state and its subjects, as well as in the development of regulations on the provision of social guarantees. The research has tested the chosen assessment methodology in the macroregions of Russia and adjusted the methodology based on the features of this research.

and Victoria A. Saidakova

1

Introduction

The current economic situation dictates new conditions for ensuring and evaluating favorable living conditions for the population. The issues of regulation, provision, and evaluation of the population with social benefits are becoming relevant again because the COVID-19 pandemic caused the greatest harm to socio-economic development (death of the population, rising unemployment, falling income levels, and inability to receive health services). According to the National Security Strategy operating on the territory of the Russian Federation, the central aspects of the socio-economic policy aim to ensure a decent life for the population, create the necessary environment for maintaining health, and increase opportunities for acquiring quality education (Presidential Executive Office, 2021). Socio-economic development has a significant impact on the development and implementation of public policy. Its main component is the social sphere, which characterizes the level of social security. Ensuring social security implies the social provision of the population with vital benefits. However, the level of development of social security in the regions and, consequently, in the federal districts is heterogeneous. Accordingly, it is necessary to study the level of social security of the population in Russia at the level of federal districts (macro-regions).

Keywords

Social security · Integral indicator · Socio-economic development · Ranking

JEL Codes

C12 · C15 · E24 · I31 · O18 · R11 · R50 · R580 N. K. Savelyeva (✉) · V. A. Saidakova Vyatka State University, Kirov, Russia e-mail: [email protected]

2

Methodology

Contemporary science has no unified approach to assessing the level of social security. The issues of social security of the population and its assessment are studied in the works of foreign and Russian authors. Thus, the assessment of human capital in the mid-twentieth century was based on the theory of G. S. Becker (1964), J. Mincer (1958), and T. W. Schultz (1961). This theory consists in considering human capital as a factor

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_90

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of production. In the 1990s, the UN developed an index that allows comparing the level of poverty, literacy, and life expectancy. It was named the Human Development Index. In addition to this indicator, an index of human poverty has also been developed, which characterizes the numerous types of deprivations of the population that they face in the areas of health, education, and living standards (Eliseeva et al., 2016; UNDP, n.d.). The current view on the issues of social security and its assessment also does not have a single point of view. Nevertheless, there is an extensive research base. Interregional inequality as one of the problems of social security of the population is reflected in the work of V. Bobkov and A. Gulyugina, who analyze the criteria of inequality in quality and standard of living in relation to the level of economic development of the territory (Bobkov & Gulyugina, 2012). A. E. Serkova notes the concern of the public and authorities with social problems. Their solution is of a long-term nature because there is no basis to assess the current state of development of the social sphere (Serkova, 2021). It should be noted that social security is based on political stability and support. This is shown by the study of R. Beetsma et al. (2021). They consider the point of view that financing social security involves an uneven distribution of costs and benefits between groups of the population, while future recipients of social benefits acquire more net benefits. K. McKiernan, in turn, proposes to abolish the payroll tax, which increases the welfare of the population and, consequently, social security (McKiernan, 2021). T. Dijkhoff emphasizes the relevance of an integrated approach to social protection and security for the harmonized coordination of various areas of territorial policy (Dijkhoff, 2019). A team of authors from the Vyatka State University focuses on the development of the unemployment social insurance system because this process significantly affects the decision-making of territorial authorities within the framework of social security of the population (Bespyatykh et al., 2022; Ganebnykh et al., 2021). E. Hunt and F. Caliendo investigate the population’s welfare. Social security acts as a key aspect in solving the problem of insufficiency and the level of well-being (Hunt & Caliendo, 2022). A. A. Kuklin, S. E. Shipitsyna, and K. S. Naslunga propose to investigate the social component of the policy using an indicative method by comparing the social security criteria with the level of budget financing, which, in turn, will reveal destabilizing factors (Kuklin et al., 2016). V. N. Bobkov and E. V. Odintsova analyzed social inequality in Russia by income level, consumption of goods, accessibility of social infrastructure, population structure, place of residence, age, and digitalization. The research resulted in developing a program to increase the social

N. K. Savelyeva and V. A. Saidakova

security of the country’s population, which is relevant in the context of the pandemic and global crises (Bobkov & Odintsova, 2020). A new approach to assessing social security and, accordingly, human capital was proposed in the scientific work by S. G. Shulgin and Yu. V. Zinkina, consisting of the development and testing of the indicator of human life (2021). O. V. Zaborovskaya, E. V. Plotnikova, and E. E. Sharafanova assessed the conditions for the formation and development of human capital in Russia through the use of economic and mathematical methods (2015). After analyzing scientific sources, the authors hypothesized that the assessment of social security of the population of the federal districts of the Russian Federation could be carried out through the use of an integral criterion— the index of residents; social security. The proof is the result of testing the methodology in federal districts. The scientific novelty of this research lies in the approbation of the chosen methodology for assessing social security at the level of macro-regions of Russia. Therefore, the research purpose implies testing the hypothesis and assessing the level of social security, which will allow adjusting the state socio-economic policy in the future through neutralizing the identified destabilizing factors. The basis of this research was economic-statistical methods and general scientific methods. As part of the analysis of the level of social security of residents of federal districts (FD), the authors applied a method based on the calculation of the index of residents’ social security (IRSS) (Oleinik, 2009) developed by O. S. Oleinik. The indicator covers the financial component of the population’s livelihood, the level of education, health care, and the budget sphere. The index should be calculated as a ratio of the actual value of the district indicators for the studied period to the optimal level for the analyzed set of districts, the sum of which is subsequently divided by the number of criteria. Six statistical indicators are used to calculate it: 1. Average per capita monetary income of the population; 2. Gross coverage rate of children (1–6 years old) with preschool education; 3. The number of students receiving education in secondary vocational and higher educational institutions, per ten thousand people; 4. Capacity of outpatient polyclinic organizations for ten thousand people; 5. The number of hospital beds per ten thousand people; 6. Expenditure items of the consolidated budget of the macro-region (the amount of funds spent by the consolidated budgets of the regions of the district) for housing and communal services (HCS) and socio-cultural events.

Assessment of Social Security of the Population of Federal Districts

The optimal value of these indicators will be the limit (maximum) level in the studied set of districts. The IRSS level allows ranking and grouping of federal districts: • High level of social security of the population (the range of IRSS values—≥0.800); • Medium level of social security of the population (0.500–0.800); • Low level of social security of the population ( paw, foot, heel . . ., boots, shoes, socks . . ., base, support, root . . .; bottom, under, soil, path, . . .; walk, kick, etc. Moreover, the authors established common, close, and distant reflexes of the discussed root in the compared languages. These results are important for the theory and practice of Nostratics as a branch of comparative-historical linguistics.

Etymology · Comparative linguistics · Nostratics · Names of body parts · Root · Prototype · Root reflexes · Semantic expansion · Transformation

JEL Code

Z13

1

Introduction

The relevance of the research topic lies in the fact that contemporary reflexes of the ancient root with the meaning “foot” have not been the subject of special study from the point of view of Nostratics and comparative-historical linguistics. Etymological studies and dictionaries of Eurasian languages have already accumulated solid factual material, which is sufficient for a convincing reconstruction of the prototype name of “foot” based on the semantic and sonorous commonality of its derivatives and transforms. These studies include the works of Abramovich et al. (1988), Asimov (n. d.), Dolgopolsky (1967), Gamkrelidze and Ivanov (1984), Gartsevskaya et al. (1975), Khaidakov (1973), Kurkina (1971), Kuznetsova and Efremova (1986), Levina (2012), Meillet (1938), Nadeliev et al. (1969), Reformatsky (1960), Sevortyan (1978, 2003), Shansky (1965), Starostin et al. (2016), Starostin (1991), Syromyatnikov (1977), Toporov (1978), Usatov et al. (1952), Vasmer (1986), Yakhontov (1965), Yudakhin (1965), Zulpukarov (2016), Zulpukarov and Amiraliev (2019), Zulpukarov et al. (2021a, b).

K. Z. Zulpukarov · S. M. Amiraliev (✉) Osh State University, Osh, Kyrgyz Republic # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_91

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2

K. Z. Zulpukarov and S. M. Amiraliev

Methodology

The collected factual material allows us to present the ancestral root in the form “but” [foot] and the ways of its modification in Figs. 1 and 2. We believe that the transformation of the prototype in ancient and contemporary languages took place within the framework of active phonetic processes (epentheses, metatheses, alternations, and others) and semantic changes, i.e., in accordance with the phonologicalsemantic regularities of the language.

3

Materials

The research is based on the achievements of comparativehistorical linguistics and is carried out using the methods of comparison, correlation, description, and reconstruction. It is known that the names of body parts belong to the basic vocabulary of the language. Having the signs of origin and stability, they are not borrowed, do not go out of use, and, only expanding their semantics, are subjected to a variety of phonetic and semantic modifications. The reconstructed root “but” [foot] belongs to the basic vocabulary of the language. During its development, the discussed root received transforms but, put, bet, ped, etc. with various semantic modifications: foot, heel, thigh; bottom, under, soil; way, path, trace; step, branch, arm (of a river); walk, move; boot (Figs. 1 and 2). One of the first comparativists to study the notion of foot in the Nostratic languages was A. B. Dolgopolsky. In his article “In search of a distant kinship,” he provides some data on the

etymology of words with the meaning of “foot” in the Eurasian languages. According to his hypothesis, the root morphemes in the Russian word pedal (from Latin pedalis—foot), football (from English football), podagra [gout] (from Greek pod— foot), and peshekhod [pedestrian] go back to the Indo-European hypothetical root ped/pod [foot, leg] (Asimov, n.d.). Not only the examples presented in Fig. 2 but also many other word roots are derived from the ancestral root ped/pod, which we reconstruct somewhat differently—as but [foot], considering the new data found in various Eurasian language families. We regroup the research material and present it under several items.

4

Results

4.1

Вut > but/bet/begt/bech . . . [Foot, Thigh, Haunch . . .; Leg (of an Object), Stand, Base . . .] in the Altai and Indo-European Languages

Reflexes of the root but are widely represented in the Turkic languages: • Altai, Balkar, Gagauz, Kazakh, Karaite, Kyrgyz, Kuman, Kumyk, Crimean-Tatar, Lobnor, Nogai, Turkish, Uzbek, and Uighur dialects—бут [but]; • Altai, Karakalpak, Lobnor, Teleut, Uzbek, Uighur, SarygYugur, and Shorie dialects—пут [put]; • Tatar and Uzbek dialects—бўт, пыт [bŭt, pyt];

Fig. 1 Transforms of the root but [foot]. Source: Developed by the authors

Transforms of the root but [foot]

Apocope + alternation pe, pa, bi, pu, fu, be Epithesis buta, buda, fata, beše byta, boda, feta, pura bota, pode, peta, pese bote, podu, piata, bedra botta, peta, pads, puda

Prosthesis step upad

Epenthesis bekt, fand begt, pint buht, pant Apocope buh, pan bek, fan

Alternation but, bud, ped, peš, pas, fei byt, byd, pod, beš, pat, pou bot, bod, pid, pes, pei, bei Vowel lengthening būt, pūt, bād, fōt fūt, bēd, pēs

Metathesis *but >tub/tup tub, tüp, tap, tut, dam, tum tab, tip, dab, tov, dum, tam tep, top, deb, tab, dim, töm Epithesis tapa, dupa, daiba, tuibi tupe, dapo, dibu, buita tepi, tubu, dibiao, bēde

Apocope di, ta, do ti, tē, da

Epenthesis pantis, pauto pende, bouda

On the Reflexes of the Ancient Root “But” [Foot] in Nostratic Languages Fig. 2 Semantics of derivatives of the root but [foot]. Source: Developed by the authors

to have feet to cut the feet off to kick the foot to grab a foot

to walk to fall to sink to drop

523

to kick to savage to tramp to crush to trample to beetle to beat

Verb Semantics of derivatives of the root but [foot]

Adjective

low lower short pedestrian fallen deep

foot paw leg heel haunch thigh shin hindleg claw shoulder palm

wayfarer pedestrian trail walk footpath trace step degree shelf base station foothold

double layered superficial terricolous fallen

boots shoes cleats socks stocking heel waistcloth pant sole insole part of a sleeping bag

base move pillar foundation realization creation stem origination

• Azeri and Turkish—буд [bud]; • Turkmen and Uzbek dialects, Khorasan, and Yakur—буут [buut]; • Chuvash—nĕsĕ/nĕs. They represent the following meanings: 1. Leg, human foot (Altai, Balkar, Karakalpak, Kyrgyz, Kumyk, Lobnor, Tuvan, Tofalar, Uzbek dialects, Uighur,

to trim to chop to uproot to crumble to shatter

to die to bend to lower head to take root to hide

utterly Adverb

low down underneath supinely afoot

Noun near intimately entirely closely fully wholly

road, path trace bottom floor ground soil territory steppe clay ash dirt cellar window sill depth abyss chasm

way method approach means rule position state

leg (furniture) stand step pedal root prop piles handle bottom of a haystack foot part of the back against the belly

trace imprint impression prototype shape type

beside accordingly concordantly precisely

branch offshoot bough, twig haulm stem sprout plant shoot bud botany sleeve baton stick whip pole

target hawk trap leg trap shackles fetter

Saryg-Yugur, and Yakut), the whole leg of a man (Altai dialects, Chagatai, and Turkish), all lower limb (Balkar); 2. Leg (of furniture, appliance) (Tuvan); handle (of scissors) (Yakut); stand, leg (of a thing) (Altai); support, prop (Kazakh dialects); base (Tuvan, Old Turkic); pant (Chuvash); 3. Hip (Bashkir, Koybali, Sagai, Tatar, Turkmen, Shorian, Khakassian, Chuvash, and Yakut);

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4. Thigh (Balkarian, Gagauz, Karaite, Lobnor, Nogai, Tatar, Turkish, etc.); shin or thigh and shin (Kazakh); hindleg (Altai, Kyrgyz, Tuvan, etc.); ham (Azeri); hind of an animal (Yakut). Turkic scholars reconstruct the archetype of the notion of the foot in the form of буут/пуут [buut/puut] (M. Rasenenen, J. Clawson, A. M. Scherbak, et al.). Kh. Pedersen attributes the Chuvash form to the archetype būqtak from būtqak as a result of metathesis. We present the transformation of the form in a simpler way: bиt > бут/пут/буд/пыт/буут/пĕс [but/put/bud/pyr/buut/nĕs]. The alternation of -d, -t, and s in the final part of the identifiable roots is a productive phonetic phenomenon in the compared languages. А. B. Dolgopolsky compares the common Turkic ajak/ ajaq [foot] with the Nostratic primordial root pad [foot], assuming the disappearance of the initial p- in the word and the alternation j/d in its final part and accepting the identity of the suffix -ak in the Korean word padak [foot] and the common Turkic ajak.

4.2

*But > bot/but/put/pus/puc/peš/puž/bont/ bunt/punt . . . “Way, Path, Trace, Footstep, Heel, Step, Walk, Root, Bottom, Down, Depth”

We can also derive the names of ways and paths to the Indo-European root pod derived from but: • Vedic panthāh, Avestan panta [path] (ablative case, plural pathi-bhih, genitive-ablative case, singular path-ah), Old Slavonic pẽtь, pons (genitive case, plural pontium), Old Prussian pintis [path], Greek patos [step, path]; • Russian and Ukrainian путь, Belgian пуць, Bulgarian път, Serbo-Croatian пут, Slovenian рot, Chech pout, Slovak рutь, Polish рас, Upper Sorbian рис, Polabian põt, Old Indian panthās [path, road, way] (ablative case pathā), Avestan panta, Ossetian fandag [path], Old Persian pintis [way, road], Latin pons (genitive case pontis) [bridge, way], Greek pontos [sea, way by the sea], patos [path], New High German finden [to find], Old High German fandon [to punish, to test]; Russian путик [the way of a hunter, checking his trapas], путина [a fishing campaign]; • Russian пята, пятка, пятки, Ukrainian пята, Bulgarian пета, Serbo-Croatian пета, Slovenian peta, Czech pata, Slovak p€ata, Polish pięta, Upper Sorbian pjata, Old Prussian pentis [heel], pintis [road], etc. In a number of examples, we see the epenthetic [n], which arose during the divergence of the ancient nasal vowel.

4.3

Formula but [Foot] > Branch, Bough, Offshoot, Stem, Sprout, Plant

The closes base to the root but [foot] is the base but [branch, shoot], which gave rise to the meaning “something divided” in the Indo-European and Altaic languages and served as the outcome of the substantive derivative butak/butyk [branch, twig, bough] (G. Dörfer, M. Ryasenen, M. A. Khabichev, and other comparativist linguists). The model but [foot, thigh] > buta- [to cut branches] > butak [branch] convincingly and clearly represents the constructive-semantic transformation of the primary root bиt. This understanding of the development of the primordial root bиt identifies the roots of two distantly related languages—Russian “вет- (ветвь, ветка)” [branch, twig] and Kyrgyz “бут- (бутак)” [branch, twig, bough]. Indo-European languages provide the following examples: Greek botavi [plant], Latin botanika, German Botanik, Russian ботаника etc. [the science of plants]; Russian ботва, Ukrainian ботва, ботвина [beet greens], бут [green onions], бутвиння [leaf vegetables: parsley, onions, dill, etc.], Belgian ботва [plant—beet, greens of indigenous vegetables], Serbo-Croatian batvo [branch, twig, sprout, shoot] etc.

4.4

But [Foot] > but/būt/byt/byht/bokt . . . “To Beat, To Hit/A Hit, To Split/A Split, To To Swish/A Swish, To Stamp/Stamp, and To Kick/A Kick”

The manifestation of this formula can be traced in many languages and language families of Eurasia and, above all, in the Altaic languages: • Turkic: Old Turkic butat [to strip, punch (the base of the cloth on a loom)], butta [kick a foot, grab a foot]; Kyrgyz buta [to chop branches, clear (a tree) of branches], бытыра [shoot (hunting)], бытра [to scatter, be in disorder; to be broken up or split up], бута [target; bush]; cf. the last example with French but [target]; • Mongolian: Mongolian бут/бута [to smash to pieces, utterly], бутара [to break, to crush], бутрах [to smash, to scatter]; Buryat бута/бутара [to smash to pieces]; • Manchu-Tungus: Evenki бутэктэ [to smash, to dig up], буут [to break, beat, stab (something fragile), smash to pieces], etc. The meaning of “smash to pieces” is adverbial and is related to the meanings of “target” and “shot” in the Turkic languages.

On the Reflexes of the Ancient Root “But” [Foot] in Nostratic Languages

4.5

But [Foot] > tub/tup/tob/top/teb/tep . . . “Bottom, Under, Base; To Stomp, To Kick . . .”

The Eurasian languages are marked with metathesis of but/ tub, resulting from the rearrangement of consonantal sounds [metathesis is described in (Starostin, 1991; Toporov, 1978; Zulpukarov, 2016)]. Therefore, we compare a number of other words of these languages to these examples based on their etymological commonalities: 1. Turkic languages: Old Turkic tep [to kick, to savage; beat grain of ears, thresh]; Kyrgyz темин [a group of animals, mainly oxen and horses, which thresh grain with their feet in the threshing floor], темин [(of the horseman) to strike feet against the horse’s flanks; to spur the horse]; Old Turkic tepek [a kick], tepin/tipin [to kick, to savage], taban [sole, shoe sole], tabanla [to savage (of a camel)], tamga [a sleeve, a tributary of a river, a small river, a stream], toprag [land], tüp [lower part, bottom], töpün [bottom], etc.; 2. Slavic languages: Russian тепу/тепти [to beat], утепти [to kill]; Ukrainian тепу, тепти; Bulgurian тепам [to roll, trample, beat]; Slovenian tepsti [to beat, batter]; Russian топот, топтать, топчу [stomp, to stomp]; Bulgarian тъптя, тъпча [to trample, swing]; Upper Sorbian teptac; Lower Sorbian teptas; Czech deptati, etc.; 3. Other Indo-European languages: Baltic: Latvian tepju, tept [to smear]; Lithuanian tapyti, tapaũ [to mould], tepu/tepti [to smear], tap(š)noti [to pat with the palm]; Old-Indian topati/pra-stumpati [pushes], Latvian staũpe [hoof tracks]; Greek tupos [hit, imprint, impression]; Latin typus; French typе [imprint, protorype, type]; 4. Uralic languages: Mordovian tapa, Finnish tappa, Hungarian tap, tоp [топтать], Nenets tapа [to push, beat]; 5. Dagestani languages: Lezginn дабан, Kyrgyz даьбаьн [heel]. The presented examples show that the metathesis but > tub/ tup preserved and developed many meanings of the archetype in a new way.

4.6

But [Foot] > *but/pet/fez/pend/bot/bōt/ bāt/pot/put//tob/top/tut/teb/tem/tim/tom . . . “Shoes, Boots, Stockings, Tether, Pants, Wrap”

The English-Russian word boots [cleats], “soccer boots with hard toes and counter, without heels, with studs and cross bars on the soles,” is exceptional etymologically. It is more likely to be derived from the root but [foot], as are many other similar examples.

525

Indo-European examples:

languages

provide

the

following

• Roman: French bottes fortes [high boots with hard cuffs with a wide sleeve], botta [boot], bottina [shoe]; Ukrainian ботинок/бутинок [slipper] (metathesis to fut); Bulgarian ботини/ботинки [children’s/women’s shoes], ботинки [knee-high boots; Czech botinka (diminutive), bota [boot]; Slovak botinka/botka [boot]; • Baltic-Slavic: Lithuanin bātas [boot]; Belgian, Russian, Ukrainian бот [boot]; Czech bot [boot]; Slovak bota [type of leather shoes].

4.7

Reflexes of the Root But in the Chinese Language Compared with the Facts of Other Eurasian Languages

The root but has many different transforms but/bet/put/pet . . ., among which the metathetic variants tup/tep/dup/dep . . . stand out. In today’s Chinese, there are no words with final t and -p because, under the influence of the open syllable law, this language was deprived of final consonants, except for -n and -ng, already in the first millennium B.C. Therefore, our register of Chinese words with the most ancient meanings “foot” and “bottom” contains only the words with open syllables, i.e., without final -t and -p. It should be noted that reflexes of the root without final t are also found in the written records of the ancient Indo-European languages of Eastern Turkestan, called Tocharian A and Tocharian B: Tocharian A ре [foot] and Tocharian B pai [foot]. The disappearance of the final -t can be found in some forms of the declension paradigm in Latin and Greek: Latin pēs [foot] (genitive case pedis), Greek pous [foot] (genitive case pados). As we see, the “relic” of the final -t is preserved in the genitive form and is absent in the nominative. The absence of final -t and -p is also characteristic of some reflexes of the root but/tup in the Altaic languages: 1. Formula tup > doo/dou/dog . . . is reflected in Mongolian languages: written Mongolian доура [below, down, lower; worse], догугур/догуур/доигур [low, below, under]; Mongolian догуур [below, low; under], доош [down, below], etc. The alternation of a long vowel with a sound combination is a characteristic phonetic process for the Turkic-Mongolian languages: cf. Kyrgyz тоо— Uzbek таг [mountain]; Kyrgyz суу—Uzbek сув [water]; Kyrgyz туу [to give birth; to be born, to lay egs, to graze, to rise (about Sun, Moon)]—Uzbek туғ [to give birth]; Kyrgyz тууду—Uzbek туғди [gave birth to]; 2. Formula tup > tu/tuu/tее/tüg/teg . . . has reflexes in Turkic languages: Kyrgyz тээ in the example “тээп жиберди”

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[hit (with a foot)], where -n is not a residue of the root but a sign of the participle: тээп [(lit.) kicking, hitting (with foot, hindlegs), savaging]; Kyrgyz dialect түк/түг [bottom, root, under], тек/так (in dialects) [base, source, basis, origin], тээк [plate (horn) connecting stirrup leathers of a hunting bird; bridge (of a musical instrument); help]; cf. the derivatives: текөөр [spurs (of a rooster)], etc. In the latter examples, the final -k is the result of the divergence of the ancient long vowel: уу > ук/ уг, ээ > эк/эг; cf. Kyrgyz соо/сак [healthy], тоо/так [mountain], etc. The Chinese language contains a great number of reflexes of the Nostratic primordial roots but > tup, which are in metathetic relations with each other and are realized in two types of variants and variations.

5

root but probably had a specific meaning, naming only the lower limbs of humans and animals (foot, legs). During the development of linguistic thinking and the character of people’s life activity, the root reflexes acquired new meanings and became nominatives of objects, phenomena, and qualities connected with the lower limbs in different ways. 6. Functional and semantic modification of the meaning of “foot” is presented in the following semes: (1) “leg,” “heel,” “paw,” etc.; (2) “step,” “go,” “move,” “walk,” etc.; (3) “shoes,” “boots,” “slippers,” etc.; (4) “bottom,” “under,” “base,” etc.; (5) “path”, “road”, “route,” etc.; (6) “soil”, “land”, “steppe,” etc.; (7) “plant,” “stem,” “sprout,” etc.; (8) “stick,” “baton,” “blow,” etc.; (9) “prune,” “chop (branches),” “cut soots,” etc.; (10) “beat,” “kill,” “smash/crush,” “stomp,” etc.; (11) “sleeve,” “sect,” “bay,” etc.; (12) “depth,” “bottomless,” “lowland,” etc.

Conclusion

The authors investigated the ways of transformation and semantic enrichment of the primordial root but [foot] in the Nostratic languages and came to the following conclusions: 1. In the process of historical development and branching of the proto-language, distancing its dialects from each other and transforming them into languages and language families, the ancestral root but [foot] was subjected to various formal-semantic changes. 2. The root but [foot] produced a metathesis in a distant prehistoric period of language development. The form tuр [foot] is secondary to it and arose later, retaining the original meaning and acquiring new semes. 3. The facts of today’s languages indicate that the transposition of consonants in the root (but/tup) occurred even before the distance of Sino-Tibetan languages (so far, we rely only on the facts from Hanyu Pinyin) from other Nostratic languages because reflexes of the metathesis but/tup with open syllables are presented in a number of root words of the Chinese language. 4. The transformation of the root went in two directions: (a) but > but/bud/bat/bad/vut/vud/vat/vad/put/pud/pat/ pad/bu/ba/vu/va/pu/pa . . .; (b) but > tuр > tub/tup/tab/tap/dub/dab/tu/ta/du/da . . .; each of these variants within itself, probably highlighting sub-variants, opened up a position for the emergence of new variants, e.g., put > pũt > punt or dap > dao/dai/da . . . 5. Semantic enrichment of the lexicon of the proto-language occurs in the process of development of cognitivenominative, thought-cumulative, and communicativeinformative activity of its speakers. In prehistory, the

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On the Reflexes of the Ancient Root “But” [Foot] in Nostratic Languages Starostin, S. A. (1991). The Altai problem and the origin of the Japanese language. Nauka. Starostin, G. S., Dybo, A. V., Militarev, A. Yu., & Peyros, I. I. (2016). To the origins of linguistic diversity. Ten conversations on comparative and historical linguistics with E. Ya. Satanovsky. Moscow Syromyatnikov, N. A. (1977). On metathesis in Nostratic languages. In V. S. Khrakovsky (Ed.), Problems of linguistic typology and language structure (pp. 178–183). Nauka. Toporov, V. N. (1978). Once again about the i.-e. *budh- (:bheudh-). Etymology, 1976, 135–153. Usatov, D. M., Mazur, Y. N., & Mozdykov, V. M. (Eds.). (1952). Russian-Korean Dictionary: About 30000 words (2nd ed.). GIS. Vasmer, M. (1986–1987). Etymological Dictionary of the Russian Language: In 4 vols. (O. N. Trubachev transl. from German; B. A. Larin Ed.; 2nd ed.). Progress. Yakhontov, S. E. (1965). Ancient Chinese. Nauka. Yudakhin, K. K. (1965). Kyrgyz-Russian Dictionary (Books 1–2). Frunze.

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Social Unemployment Insurance Systems in China and Russia: Comparative Characteristics Nadezda V. Gamulinskaya , Anastasia A. Sozinova Garkovenko , and Natalia N. Zubareva

Abstract

The paper aims to compare the social unemployment insurance system in the People’s Republic of China and the Russian Federation, as well as to identify similar elements and differences and the possibility of transferring the experience of China to the Russian social unemployment insurance system. During the research, the authors use general scientific methods such as analysis, synthesis, generalization, induction, deduction, and comparison. After comparing the Russian social insurance systems with the parameters of the system operating in China, the authors revealed certain similarities and differences. The research on China’s experience can contribute to transferring certain elements of it to the Russian social unemployment insurance system. Keywords

Social insurance · Unemployment · People’s Republic of China · Comparative analysis

JEL Codes

Е24 · F66 · G28 · G52 · H24 · H53 · H55 · H75 · I38 · J21 · J65

1

, Veronika E.

Introduction

The economy is now characterized by the need to attract high-quality labor resources. According to experts, during the economic crisis, the restructuring of the economy is a consequence of the lack of stability in the processes of employment of the population and high risks of job loss. Employment is the essential means of survival and the basis for the stable growth of people’s incomes. The problems of unemployment have recently become extremely pressing. Recent years saw an increase in the global unemployment rate. Global unemployment was 5.4% in 2018 and 5.9% in 2022 (ILOSTAT, n.d.). These dynamics indicate the increasing level of unemployment rate in the global community, which bring to the fore the problem of the availability of social insurance for the unemployed. Global experience has different approaches to organizing the work of employment agencies and the implementation of employment programs, as well as measures of social protection against unemployment. Thus, it is necessary to compare social security systems against unemployment. This research aims to analyze regulations that form the basis of the social insurance system for unemployment in China and compare the Russian social insurance system for the unemployed with a similar system in China. The scientific novelty of this research includes a comparison of social unemployment insurance systems in the selected countries. The practical significance of the research implies the possible use of the results in the development of the social insurance system against unemployment in Russia.

N. V. Gamulinskaya · A. A. Sozinova (✉) Vyatka State University, Kirov, Russia e-mail: [email protected]; [email protected]

2

V. E. Garkovenko Plekhanov Krasnodar Branch of the Plekhanov Russian University of Economics, Krasnodar, Russia

The research uses general scientific methods, including analysis, synthesis, generalization, induction, deduction, and comparison.

Methodology

N. N. Zubareva Belgorod State University, Belgorod, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_92

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As part of the research, the authors selected the following key parameters that are important for comparison: the method of financing the unemployment insurance system, the conditions and frequency of the unemployment allowance, and the date of commencement of the unemployment allowance and its amount. The system of social insurance against unemployment in Russia is considered in part of the law “On employment in the Russian Federation” (April 19, 1991 No. 1032-1) (Russian Federation, 1991). Considering the experience of social security in China, it is noted that unemployment insurance is included in the social insurance system, which is regulated by the law “On labor” (People’s Republic of China, 1994). The law of the People’s Republic of China “On social insurance” (October 28, 2010) provides general provisions on the conditions for unemployment payments (People’s Republic of China, 2010). The procedure for providing unemployment insurance is specified in the Unemployment Insurance Rules (Ministry of Human Resources and Social Security of the People’s Republic of China, 1998) It is necessary to specify that the team of authors has already used these parameters in the works devoted to studying social insurance systems against unemployment in Russia and foreign countries (Bespyatykh et al., 2022a, b). The problem of developing a system of social insurance against unemployment is reflected in the works of such researchers as E. V. Ganebnykh (2021), S. I. Maksimov and D. A. Rusinov (2021), S. E. Pashkova and F. I. Mirzabalaeva (2021), O. V. Rodimushkina (2021), G. P. Voronin (2018), E. V. Yanchenko (2020), S. Zhang (2021).

3

Data Availability

The main economic indicators of labor in compared countries (Trading Economics, n.d.), which are described in the following section of the research, are available at https:// figshare.com with id https://doi.org/10.6084/m9.figshare. 20453622

4

Results

Unemployment is a condition in which workers remain without work involuntarily. Unemployment statistics measure the state and extent of unemployment in the economy. The key indicator used to analyze unemployment is the unemployment rate. It represents the number of unemployed per total unemployed labor force. In Russia, the unemployment rate is 1.4% lower than in China. The number of unemployed Russians is three times lower than in China. Russia is inferior to China in terms of average and minimum

wages. Chinese citizens earn twice as much income as Russians. Social unemployment insurance is a system that is provided by the government through legislation and is centrally established by society to provide material assistance and re-employment services for a normatively established period to workers who lost wages after interrupting work. China’s social unemployment insurance system was created in 1986 for employers of state-owned enterprises. Unemployment social insurance payments are jointly paid to the unemployment fund by two parties: employees and employers. Urban enterprises and institutions pay unemployment insurance payments in the amount of 2% of total wages. Employees of urban enterprises and institutions pay unemployment insurance payments in the amount of 1%. Migrant wage earners employed by urban enterprises and institutions do not pay unemployment insurance payments. By agreement with the Central Government, the governments of provinces, autonomous regions, and municipalities may adjust the premium rate based on the number of unemployed people and the size of the unemployment insurance fund in their respective administrative regions. Unemployed persons who meet the following conditions can get unemployment payments from the unemployment insurance fund: • The employer and the individual have paid unemployment insurance payments for at least one calendar year prior to unemployment; • The employee did not resign voluntarily; • The dismissed worker is registered as unemployed and is looking for a job. An unemployed person is issued a certificate of termination of employment; after receiving it, he or she applies to the designated state employment agency with an application for registration for unemployment. The Social Insurance Agency issues documents to the unemployed person for receiving payments and the unemployed person who has all necessary documents applies to the specified bank to receive unemployment insurance payments. The term for receiving unemployment insurance payments is calculated from the date of registration for unemployment. Unemployment insurance payments are paid monthly by the Social Insurance Agency. Maximum periods for receiving unemployment insurance payments are as follows: • 12 months if the employer and the unemployed person made unemployment insurance payments for 1–5 years;

Social Unemployment Insurance Systems in China and Russia: Comparative Characteristics

• 18 months if the employer and the unemployed person made unemployment insurance payments from 5 to 10 years; • 24 months if the employer and the unemployed person made unemployment insurance payments for more than 10 years (People’s Republic of China, 1994). Unemployed people who were not employed after the maximum payment period and who have less than 1 year left before the statutory retirement age may continue to receive unemployment payments until retirement (Ministry of Human Resources and Social Security of the People’s Republic of China, 2020). During the period of receiving unemployment insurance payments, the unemployed can use the basic health insurance provided for employees. Health insurance payments are paid for the unemployed from the unemployment insurance fund. Unemployed people who receive unemployment insurance payments stop receiving it if one of the following circumstances occurs: • • • • • • •

Employment; Induction into the armed forces; Emigration; Receiving pension insurance payments; Deprivation of freedom; Refusal to find a job or study without sufficient reason; Other circumstances stipulated by laws and administrative acts (People’s Republic of China, 2010).

Fig. 1 Reasons for refusal to register as unemployed. Source: Compiled by the authors based on the law of the Russian Federation “On employment in the Russian Federation” (Russian Federation, 1991)

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If the Chinese local governments are directly subordinate to the state, the amount of unemployment insurance benefits is determined by the government of the province or autonomous region at a level below the local minimum wage and above for urban residents (Ministry of Human Resources and Social Security of the People’s Republic of China, 1998). Let us move on to another research object—the social security system against unemployment in the Russian Federation. The working population that does not have work and income belongs to the category of unemployed. They are registered with the employment center to find a suitable job and are ready to start working. The decision to recognize a citizen as unemployed is made by the employment service authorities from the day the unemployed person submits an application for providing him or her with a state service to assist in finding a suitable job and if the employment service authorities have documents or information necessary for registering the unemployed citizen. Categories of citizens who cannot be recognized as unemployed are shown in Fig. 1. Unemployment benefits are correlated to the average income at the last place of work. Along with this, this category of citizens must be in an employment relationship for at least 26 weeks for 12 months before the unemployment process begins. In the first 3 months, 75% of the average income is accrued, in the next 3 months—60%. The size of the studied payment has its limits. The lower limit is the minimum amount of the benefit; the upper limit is

The following citizens are not recognized as unemployed: Under 16 years of age If they recieve an old-age insurance pension If they refused from two suitable jobs within ten days from the date of their registration with the employment service If they did not send information to the employment service authorities about the choice of two options of a suitable job or vocational training If they did not send information to the employment service authorities about the day and results of negotiations with employers on the two selected options of suitable work or did not submit a referral with the employer’s mark on the day the citizen appeared and the reason for the refusal to hire the employment service

If they did not appear without sufficient reason to register them as unemployed If they were sentenced by court decision to correctional labor, forced labor, or punishment in the form of imprisonment If they submitted documents containing deliberately false information about the absence of work and earnings, as well as submitted other false data to recognize them as unemployed If they are related to employed

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Minimum: 1500 rubles – for all categories of citizens

The amount of the payment (Decree of the Government of the Russian Federation of November 15, 2021 No. 1940)

Maximum: 12792 rubles – during the first three months of the period of unemployment payments; 5000 rubles – during the next three months of the period of unemployment payments; 12792 rubles – for citizens of pre-retirement age

minimum wage, subsistence level, period of service, and voluntariness of dismissal. The study allows us to compare the unemployment insurance system in China with the social insurance system in Russia. The results of a comparison of unemployment insurance systems in Russia and China are presented in Table 2.

5 Fig. 2 Sizes of unemployment payments in the Russian Federation in 2022. Source: Compiled by the authors

the maximum amount of social payments, considering the level of the district coefficient. These limits are determined annually by the Government of the Russian Federation. Information on the amount of unemployment benefits in Russia in 2022 is presented in Fig. 2. The accounting of payments in Russia occurs from the first day a citizen is recognized as unemployed. The period of payments should not exceed 6 months in total terms within 12 months. For citizens who have not previously worked, the total period for receiving unemployment benefits should not exceed 3 months in 12 months. Unemployment benefit is paid monthly, but no more than twice a month. Table 1 provides a summary of standard unemployment benefits. The main difference is the presence of deductions to the unemployment fund in China and the absence of such deductions in Russia. In both countries, the amount of social insurance payments for unemployment is tied to age,

Conclusion

After comparing the Russian social insurance systems with the parameters of the system operating in China, the authors identified similar and different elements. The similarities between the two systems are established in the start date of benefits, the frequency of payments, the presence of limits on the amount of payments, and the sum of unemployment benefits depending on the average earnings of the employee before the loss of his or her job. The main difference in the compared insurance systems is the sources of funding for the insurance systems for the unemployed. In China, funding is solidary, which is distributed between the employee (33%) and the employer (67%). In Russia, 100% of funding is provided by the government. Until 2001, in Russia, contributions were made from the payroll fund by employers to the employment fund in the amount of 2%. Thus, the analyzed unemployment insurance systems are aimed at improving the efficiency of state regulation of unemployment and the possibility of increasing the level of financial assistance to the unemployed. The study of the Chinese experience, in this case, can contribute to transferring it to the Russian unemployment social insurance system

Table 1 Standard unemployment payment in the compared countries

Country China

Russia

The amount of contributions to the “employment fund,” % employee employer 1.0 2.0

Not found

Not found

Unemployment payment rate Determined by the governments of provinces, autonomous regions, and municipalities

60%–75% of average earnings

Unemployment payment, CNY Below the local minimum wage and above the subsistence level of urban residents, determined by the governments of provinces, autonomous regions, and municipalities

121–1030 per month

Conditions for receiving payments The employer and the individual paid contributions for at least one calendar year prior to unemployment; the employee did not quit voluntarily; the dismissed worker is registered as unemployed and is looking for a job The unemployed person is registered with the employment service, is looking for a job, and is ready to start it

The main period of payments, months 12–24

3–6

Source: Compiled by the authors based on the law of the Russian Federation “On employment in the Russian Federation” (1991), Labor Law of the People’s Republic of China (1994), Social Insurance Law of the People’s Republic of China (2010), Unemployment Insurance Regulations (1998), Notice of the General Office of the Ministry of Human Resources and Social Security on Further Promoting the “Smooth Collection and Safe Handling” of Unemployment Insurance (2020).

Social Unemployment Insurance Systems in China and Russia: Comparative Characteristics

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Table 2 Similarities and differences in the financing of unemployment insurance systems and standard unemployment payments in Russia and China Feature Financing the Unemployment Insurance System Conditions for payments

Start date of payments

Payment period Frequency of payments Amount of payments

Similarities Russia Not found

China

Not found

From the first day of recognition as unemployed Not found Every month

Differences Russia State

China Solidary financing: employee + employer

Paid to citizens recognized in the generally established manner as unemployed and registered in the employment service

From the date of registration for unemployment

The presence of the minimum and maximum limits on the amount of payments. The dependence of the amount of payments on the average earnings of the employee

Employer and employee paid unemployment insurance contributions for at least 12 months prior to unemployment; employee did not quit voluntarily; the dismissed worker is registered as unemployed and is looking for a job

Not found

3–6 months not found

12–24 months

60%–75% of average earnings

Is determined by provincial, autonomous region, and municipal governments

Source: Compiled by the authors based on the law of the Russian Federation “On employment in the Russian Federation” (1991), Labor Law of the People’s Republic of China (1994), Social Insurance Law of the People’s Republic of China (2010), Unemployment Insurance Regulations (1998), Notice of the General Office of the Ministry of Human Resources and Social Security on Further Promoting the “Smooth Collection and Safe Handling” of Unemployment Insurance (2020)

in terms of the principle of collective solidarity and combining the risks of employers, employees, and the country.

References Bespyatykh, A. V., Gamulinskaya, N. V., Palesheva, N. V., Savelieva, N. K., & Sozinova, A. A. (2022a). Economic models of social insurance systems in Switzerland and Russia: Comparative characteristics. Kreativnaya ekonomika [Creative Economy], 16(1), 307–330. https://doi.org/10.18334/ce.16.1.114126 Bespyatykh, A. V., Palesheva, N. V., Savelyeva, N. K., & Sozinova, A. A. (2022b). Retrospective analysis of economic models of the social insurance system for unemployment in the Russian Federation. Kreativnaya ekonomika [Creative Economy], 16(2), 849–864. https://doi.org/10.18334/ce.16.2.114156 Ganebnykh, E. V., Savelyeva, N. K., Sozinova, A. A., Fokina, O. V., Burtseva, T. A., & Bespyatykh, V. I. (2021). Evaluation of employers’ readiness for unemployment insurance: Scientific analytics based on the study of opinion. Russian Journal of Labour Economics, 8(12), 1621–1638. https://doi.org/10.18334/et.8.12. 113946 ILOSTAT. (n.d.). Data. Retrieved from https://ilostat.ilo.org/data/ (Accessed 25 April 2022). Maksimov, S. I., & Rusinov, D. A. (2021). Employment insurance in Russia: Prospects for development against the background of the epidemics. Self-Management, 6(128), 47–50. Ministry of Human Resources and Social Security of the People’s Republic of China. (1998). Unemployment Insurance Regulations (approved by the Resolution of the State Council No. 258 on December 26, 1998). Beijing, China. Retrieved from http://www.

mohrss.gov.cn/SYrlzyhshbzb/zcfg/flfg/xzfg/201604/t20160412_ 237907.html (Accessed 25 April 2022). Ministry of Human Resources and Social Security of the People’s Republic of China. (2020, March 5). Notice of the General Office of the Ministry of Human Resources and Social Security on Further Promoting the “Smooth Collection and Safe Handling” of Unemployment Insurance. Retrieved from http://www.mohrss.gov.cn/ xxgk2020/fdzdgknr/zcfg/gfxwj/shbx/202003/t20200306_361582. html (Accessed 25 April 2022). Pashkova, S. E., & Mirzabalaeva, F. I. (2021). The practice of developing unemployment insurance systems in foreign countries. Russian Journal of Labour Economics, 8(11), 1357–1378. https://doi.org/10. 18334/et.8.11.113790 People’s Republic of China. (1994). Labor Law of the People’s Republic of China (approved by Decree No. 28 of the President of the People’s Republic of China on July 5, 1994). Beijing. Retrieved from http:// www.gov.cn/banshi/2005-05/25/content_905.htm (Accessed 25 April 2022). People’s Republic of China. (2010). Social Insurance Law of the People’s Republic of China (approved on October 28, 2010, revised on December 29, 2018). Beijing. Retrieved from http://www.npc. gov.cn/zgrdw/npc/xinwen/2019-01/07/content_2070267.htm (Accessed 25 April 2022). Rodimushkina, O. V. (2021). Legal regulation of unemployment benefits: international legal framework and experience of the Russian Federation. Baltic Humanitarian Journal, 2(35), 359–362. https://doi.org/10.26140/bgz3-2021-1002-0094 Russian Federation. (1991). Federal law “On employment in the Russian Federation” (April 19, 1991 No. 1032-1). Moscow. Retrieved from http://www.consultant.ru/document/cons_doc_ LAW_60/ (Accessed 25 April 2022).

534 Trading Economics. (n.d.). Economic indicators. Retrieved from https:// ru.tradingeconomics.com/ (Accessed 25 April 2022). Voronin, G. P. (2018). The system of social insurance of the population – myths and reality. Standards and Quality, 12, 1. Yanchenko, E. V. (2020). Unemployment risks in the context of digitalization of the economy. Russian Journal of Labour Economics, 7(8), 677–692. https://doi.org/10.18334/et.7.8.110729

N. V. Gamulinskaya et al. Zhang, S. (2021). Social protection responses in China and other countries during the COVID-19 pandemic. Bulletin of the Academy of Knowledge, 2(43), 261–265. https://doi.org/10.24412/2304-61392021-11079

Instrumental Competencies of Linguists in an Undergraduate Degree Seidanakhan A. Alimbaeva , Orunbai M. Suleimanov , Totukan T. Dyikanbaeva , Gulnara S. Baitikova , and Ozgonbai A. Moldojanov

Abstract

Bachelors in linguistics and literature can identify a linguistic or literary problem and reflect on it. They can find a solution to linguistic issues and effectively detect the relevant information based on their knowledge. Ultimately, linguists will be able to place the problem and its solution in the correct cultural context, appreciate its social significance, and effectively and appropriately communicate. The paper aims to research some instrumental techniques of translation and the difficulties arising during their use. The education outcomes are very wide. When students complete their degrees, they get the results of learning outcomes. Students who earn a major in linguistics should possess several competencies, including interpersonal competence, instrumental competence, strategic competence, etc. Competences are the combination of abilities, understanding, skills, and knowledge. The development of competencies is developed in different institutions and is evaluated at various phases. Keywords

Problem solving · System thinking · Strategic thinking · Consciousness · Hardware and software

JEL Codes

А39 · B59 · С89 · D80 · F64 · H80 · I23 · J62 · L53 · M53 · N35 · O35 · Z22

S. A. Alimbaeva (✉) · O. M. Suleimanov · T. T. Dyikanbaeva · G. S. Baitikova · O. A. Moldojanov Osh State University, Osh, Kyrgyzstan e-mail: [email protected]; [email protected]; [email protected]; [email protected]; omoldojanov@oshsu. kg

1

Introduction

Bachelor in linguistics and literature can identify a linguistic or literary problem and reflect on it. They can find a solution to linguistic issues and effectively detect the relevant information based on their knowledge. Ultimately, linguists will be able to place the problem and its solution in the correct cultural context, appreciate its social significance, and effectively and appropriately communicate. To achieve this goal, bachelors acquire the following basic competencies in the learning process (Khutorskoy, 2003): 1. Bachelors actively and passively acquire the languages mentioned in their diplomas and become familiar with the contexts in which these languages are used. They also use their knowledge to communicate freely with other people. 2. Students should be familiar with different literary genres and have a deep knowledge of relevant literary theories to shrewdly read literary texts and analyze them. Linguists also have the necessary understanding of the historical evolution of literature in English, Russian, and Turkish. Students can place literary texts in a broader social context. Bachelor in linguistics will get the ability to analyze theatre texts, performances, and films based on an understanding of the underlying theories of these arts and their evolution (Berns, 1994). 3. Bachelors in linguistics have an overview or contain general information about language theories and current linguistic evolution, the conceptual set of variations of English, Russian, and Turkish (e.g., history, geography, and socio-linguistics). This knowledge allows undergraduate students to analyze and critically interpret linguistic phenomena. 4. If undergraduate students are taught by an experienced researcher, they can combine the theoretical knowledge they have acquired with advanced research methods. By using state-of-the-art or advanced heuristic tools, they can

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_93

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efficiently and quickly interpret, process, identify, and evaluate information (Celce-Murcia & Olshtain, 2005). 5. Bachelors in linguistics should have general knowledge of the cultures associated with the chosen languages (English, Turkish, and Russian). Bachelors in linguistics acquire the indicated set of competencies during 4 years. The relevance of the research is that it proves that instrumental and technical competence can be considered the key aspect of linguistic competence. Instrumental competence is a comprehensive ability to effectively interact, characterized by social responsibility, independence, or self-sufficiency, and achievement orientation (Leung, 2005). The research object is instrumental competence in developing communicative knowledge, skills, and abilities of a specialist in foreign languages and views on regional and national cultural studies. The research subject is the development of instrumental competencies of students studying linguistics at today’s universities. The research objectives are as follows: 1. To promote knowledge of the instrumental competence; 2. To identify scientific views on the instrumental competence of students studying linguistics at universities; 3. To explore the ability to perceive, generalize, and analyze information; 4. To set goals and choose ways to achieve them. The authors clarifies the concept of “instrumental competence,” which is understood as the ability of an individual to put into practice public speaking based on skills, attitudes, and knowledge, considering the specifics of the native and any other culture.

2

Methods

The authors applied the following means of comparativetypological methods to achieve the research objectives: description, observation, comparison, and contrast (Baranov, 2007; Belyaeva, 2007; Berns, 1994; Bolshakova, 2011). The structure of this research comprises an introduction, methods, results, a general conclusion, and a bibliography. Every part is summarized with a conclusion. The general conclusion comprises the research results of each part. The bibliography shows the list of sources used. Interpretation is divided into two groups: simultaneous interpretation and sequential interpretation. Interpreters usually specialize in one of the two because each requires special linguistic and psychological training. Simultaneous interpretation is the most complex form of interpreting. It was first used in the

Nuremberg (the trial of 1945–1946, in which the main Nazis were tried). In the case of simultaneous interpretation, the interpreter makes the interpretation while listening (2–3 s behind). Simultaneous translation is carried out in a special cabin using technical tools. In this case, the speaker’s speech is transmitted through the headphones to the interpreter; the interpreted text is given to the recipients using the microphone (Belyaeva, 2007, pp. 36–40). One of the types of simultaneous interpretation is whispering. The interpreter works anywhere, not just in the cabin, with or without a headset and microphone. Simultaneous interpretation is the most complex form of interpreting because it requires the interpreter to be able to simultaneously listen to one language, interpret it into another language, and speak the target language while keeping up with the orator. The simultaneous presence of these three actions requires hard work, adapting the facts of one language to another, predicting what will be said, and making a decision in an instant. In interpreting events, interpreters usually provide translation from the foreign language into the native language. Medical experiments have shown that the interpreter’s heart beats at 160 per minute. Thus, the heart of a person carrying a load beats slower than that of someone who performs simultaneous interpretation (Vsevolodova, 2007, pp. 63–64). Simultaneous interpreters usually work in groups of three or four people; they are replaced every 15–20 min. It is a very difficult type of activity. Consequently, the salaries of simultaneous interpreters are also very high. Based on this classification, we can conclude that the essential characteristic of the competencies of business communication in a foreign language includes in its structure narrower competencies, the formation of which cannot occur in isolation from the study of other academic disciplines; therefore, it is especially important to consider their interrelation and interdependence (McArthur, 1992). The following three main components are highlighted: intercultural (knowledge of the basics of culture), communicative (knowledge of the basics of business), and socio-linguistic (knowledge of a foreign language) (Zubov & Zubova, 2004, pp. 5–7, 19–22, 166–173).

3

Results

These programs should be based not only on consolidating a basic system of linguistic knowledge, skills, and abilities but also on introducing students to the basics of business, ethics, and culture. Analytical ability is one of the most important capabilities of linguists (Abdiev, 2008). Each person has developed logical thinking in one form or another, but the level of its

Instrumental Competencies of Linguists in an Undergraduate Degree

development is different. Some people are inclined to make intuitive decisions, and some ponder each step for a long time. Analytical people are said to have analytical minds. One can find out the level of development of their abilities using free online tests for an analytical mindset. “Psychologists and HRMs view analytical skills as the ability to think about a specific situation and come up with a suitable solution. A person with a logical mindset studies the causes and consequences of their own or other people’s actions and draws conclusions” (Chukharev, 2009; Alekseev, 1997; Apresyan, 1966; Baranov, 2007). An analytical mindset, that is, a predisposition to thinking and logical conclusions, is useful in everyday life and at work. However, there are professions for which advanced analytical thinking is an essential skill. Each position that involves data processing and study of documentation is demanding on the ability to analyze information. Some companies use analytical thinking tasks, aptitude tests, and capacity testing for personnel changes. The analytical skills test is a great opportunity for applicants to prove their competence. For employers, tests are also a convenient and inexpensive tool for selecting new and promoting existing employees. Simultaneously, it is quite difficult for an unprepared person to show a decent result. Methodical training is the only way to improve the result (Ovchinnikova & Uglanova, 2009, pp. 92–102). Problem-solving is the primary competence of the person of the future. Leadership development expert Pavel Merinov (2022) told what complex problems are, how to make decisions, and why feedback is an important part of solving a problem. American psychologist and professor Joy Paul Guilford created the concept of multidimensional intelligence—a model of thinking based on specific mathematical measurements (Guilford, 1936, 1950). Guilford proposed solving problems by alternating between “divergent” and “convergent” thinking. That is, it is necessary to focus on the goals that help solve the problem at this stage: create options for choice or make this choice. Problem-solving is a sequential creative-analytical process. We analyze the situation, look for the problem’s causes, formulate it, and come up with solutions. The problems can be as follows: • Problem 1. The mother instructed her son to bring home exactly seven liters of water from the river. She gave him two jugs of three and five liters. How can a boy measure exactly seven liters of water using only these two jugs? • Problem 2. Imagine that regular private flights to Earth orbit became possible and comparable in cost to the average travel to another country. Think about what to do for the representatives of the tourism industry on Earth. Write down the thoughts that come to mind.

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To solve problems with greater satisfaction with the result, it is necessary to go beyond the cognitive aspect. Dr. Robert Hogan (Hoganassessments, 2012) suggests considering our reactions to bad decisions, collecting feedback, being open to further development, and being receptive to coaching (coach ability): 1. Behavioristic: at this stage, the training programs are built according to the formula “stimulus-response,” the learner is transformed from a passive learner into a learning object, and the programs perform the function of simulators; 2. Cognitive-intellectual: programs are focused on students, giving them the freedom to choose the level and type of action, thereby activating their cognitive functions (Marchuk, 2007, pp. 97–99). Nowadays, computer learning of foreign languages is a separate area of knowledge and practical actions aimed at using computers in teaching and learning languages, which has its own methodology, software tools, goals, and objectives. The use of computers ranges from traditional training programs to advanced virtual learning environments, multimedia programs, and the use of various forms of communication and storage of information on the Internet, in particular, e-mail, corpus and concordance, podcasts, etc., for didactic purposes (Baranov, 2007, pp. 112–137). One of the software shells that allows composing simple exercises in the form of crosswords, sentences with missing words, texts with mixed sentences, etc. is the Hot Potatoes program (Marchuk, 2007, pp. 38–44) When organizing a distance course, rational construction plays a special role: the selection of individual topics, the selection of theoretical material, tasks, and exercises for each topic, and a flexible system of test tasks (Zakharov, 2005; Apresyan, 1966; Baranov, 2007; Belonogov et al., 2004; Belyaeva, 2007; Berns, 1994; Bolshakova, 2011; Celce-Murcia & Olshtain, 2005; Chukharev, 2009; Dignen, 2011; Guilford, 1936, 1950; Hoganassessments, 2012). To conclude this section, we state that computer-based learning of foreign languages is a very promising area of modern linguodidactics (Lan et al., 2021). Simultaneously, one should not consider computer training resources as a substitute for a teacher. Computer training resources should be considered as a way to expand the traditional occupation to organize and perform routine work, develop students’ skills through training, increase students’ activity, and create opportunities for self-education (Alekseev, 1997). Along with the methods of using computers (automatic analysis and synthesis of oral speech, automatic text input, automatic text analysis, the use of text corpora, computer language teaching, etc.) (Apresyan, 1966; Belonogov et al., 2004), there are other areas of intersection of linguistics and

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informatics: extracting knowledge from text, automatic indexing and categorization of documents, hypertext technologies in linguistics, etc.

4

Conclusion

So, the results obtained proved that instrumental and technical competence can be considered the key aspect of linguistic competence. Educational and methodological support (recommendations for the work program and the fund of assessment tools) for the formation of instrumental competence, includes the following: • Goals and objectives; • Content adequate to the content of professional training of bachelors of psychological and pedagogical education; • Methodological elements (cognitive, meaningful, and reflexive-evaluative); • Forms of theoretical and practical training sessions and independent work of students; • Methods (didactic games, trainings, and cases) and results. The practical significance of this study is that foreign language teachers are trained in progressively structured professional development courses. The development and implementation of conferences, programs, and special knowledge are based on the materials of the work (Dignen, 2011). Instrumental competence has become a theoretically framed means of professional flexibility for linguistics students, practically tested and fully confirmed.

References Abdiev, T. (2008). Kotormo ischine kirishuu. Bishkek. https://new. bizdin.kg/media/books/Котормо_таануу_илимине_киришүү.pdf (Accessed 18 August 2022). Alekseev, V. (1997). Hear me, machine. Computerra, 49(226). Retrieved from https://old.computerra.ru/1997/226/193754/ (Accessed 18 August 2022). Apresyan, Y. D. (1966). Ideas and methods of modern structural linguistics. Prosveshcheniye. Baranov, A. N. (2007). Introduction to applied linguistics: Textbook (3rd ed.). URSS; LKI. Belonogov, G. G., Kalinin, Y. P., & Khoroshilov, A. A. (2004). Computational Linguistics and perspective information technologies: Theory and practice of building automatic text processing systems. Russian World.

Belyaeva, L. N. (2007). Linguistic automata in modern humanitarian technologies: Textbook. Book House. Berns, M. S. (1994). Functional approaches to language and language teaching: Another look. In S. Savignon & M. S. Berns (Eds.), Initiatives in communicative language teaching. A book of reading (pp. 3–21). Addison-Wesley. Bolshakova, E. I. (2011). Computational linguistics: Methods, resources, applications. In Automatic text processing in natural language and computational linguistics: Textbook (pp. 90–105). : MIEM. Retrieved from https://nsu.ru/xmlui/bitstream/handle/nsu/ 8982/17645.pdf?sequence=1&isAllowed=y (Accessed 18 August 2022). Celce-Murcia, M., & Olshtain, E. (2005). Discourse-based approaches: A new framework for second language teaching and learning. In E. Hinkel (Ed.), Handbook of research in second language teaching and learning (pp. 729–741). Routledge. Chukharev, E. M. (2009). Computer technology in linguistic research: Instructions for doing homework. Arkhangelsk. Dignen, B. (2011). Communicating across cultures. Cambridge University Press. Retrieved from https://books.google.ru/books?id= GFfKp1U8Q3sC&printsec=frontcover&redir_esc=y#v= onepage&q&f=false (Accessed 18 August 2022). Guilford, J. P. (1936, 1954). Psychometric method. McGraw-Hill. Guilford, J. P. (1950, 1956, 1965). Fundamental statistics in psychology and education. McGraw-Hill. Hoganassessments. (2012, September 13). High potential: A discussion with Dr. Robert Hogan [Video file]. Retrieved from https://www. youtube.com/watch?v=peCMaMOZKXw (Accessed 18 August 2022) -14. Khutorskoy, A. V. (2003). Key competencies as a component of the personality-oriented paradigm of education. Public Education, 2, 58–64. Lan, G., Fadeev, A. S., & Morgunov, A. N. (2021). Synthesis of human voice fragments based on the model of reconstruction of frequency spectra. Proceedings of TUSUR University, 24(2), 14–20. https://doi. org/10.21293/1818-0442-2021-24-2-14-20 Leung, C. (2005). Convivial communication: Recontextualizing communicative competence. International Journal of Applied Linguistics, 15(2), 119–144. https://doi.org/10.1111/j.1473-4192.2005. 00084.x Marchuk, Y. N. (2007). Computational linguistics: Study guide (pp. 38–44). AST East-West. McArthur, T. (Ed.). (1992). The Oxford companion to the English language. Oxford University Press. Merinov, P. Evaluating top teams: Pitfalls and workable solutions. Retrieved from http://www.hrmedia.ru/sites/default/files/pavel_ merinov.pdf (Accessed 18 August 2022). Ovchinnikova, I. G., & Uglanova, I. A. (2009). Computer modeling of verbal communication: Educational method. Flinta; Nauka. Vsevolodova, A. V. (2007). Computer processing of linguistic data: Textbook (2nd ed.). Flinta; Nauka. Zakharov, V. P. (2005). Corpus linguistics: Educational and methodological manual. St. Petersburg State University. Zubov, A. V., & Zubova, I. I. (2004). Information technology in linguistics: Textbook. Academy.

Ethnonyms as Concepts of Foreign Culture in the Text of a Fiction Gulipa A. Madmarova, Rakhat K. Ormokeeva, Mavliuda B. Rozykova, Kanykey R. Boronova, Gulmira A. Imasheva, and Gulmira A. Madmarova

Abstract

This paper focuses on foreign cultural concepts in the text of a work of fiction, which reflect the culture that is alien to the author of the work. The multiple names of such a layer of vocabulary are proof of its relevance. Works on the study of concepts are now found quite often because the conceptosphere of the people is always interesting to study, especially compared with a similar mental phenomenon, reflecting a different national specificity. Ethnonyms are nominants of concepts that are part of the key concepts of any culture. Ethnonyms serve as the primary way of self-identification of people and significantly influence the formation of people’s ethnic identity. The study of ethnonyms has been conducted since ancient times: from the works of Nizam al-Din Shami and Rashid al-Din, who discussed the origin and composition of the Chingizid and Timurid empires, and the works of Ulugbek and Babur, to contemporary scholars Murad Adji, R. Abdullaev, K. Z. Zulpukarov, and others. We can gain much information about the Turkic-Mongolian ethnonyms from the texts of the Chinese and Russian chronicles. The works of the Russian researcher L. N. Gumilev, which are unrivaled in their completeness and scientific presentation, deserve special mention. Keywords

Concept · Foreign culture · Turkism · Ethnonym · Conceptosphere · Genetic · National specifics

JEL Codes

F01 · F60 · Y30 · Y50 · Z10 · Z11 G. A. Madmarova (✉) · R. K. Ormokeeva · M. B. Rozykova · K. R. Boronova · G. A. Imasheva · G. A. Madmarova Osh State University, Osh, Kyrgyzstan

1

Introduction

Nowadays, there are many varieties of the concept: cultural, scientific, intercultural, foreign cultural, linguocultural, etc. There are also several names for the representation of such concepts: Turkisms, orientalisms, barbarisms, regionalisms, exotisms, national words, oriental words, inclusions, etc. In our opinion, the most suitable name is regionalisms, as words peculiar to a certain region. However, even this name does not fully reflect the meaning of this phenomenon. After all, words from one region may overlap in the language of another region (Central Asian and Caucasian regions). A better name is intercultural concepts, which reflect the most important concepts and ideas for a particular region and convey their national specificity. Foreign-cultural concepts are concepts found in the text of a work of fiction; they reflect a culture foreign to the author of the work. In a sense, the terms intercultural and non-cultural can be synonymous, although the latter term has a broader conceptual scope (Dmitriev, 1962, p. 515; Gadzhieva, 1964, p. 39).

2

Materials and Method

A comprehensive analysis of the conceptual picture of the world, which is the result of the activity of the human cognitive consciousness, can help reveal the features of the national reflection of the world, inherent in a particular ethnic group (Kornilov, 2003, p. 116). Interesting studies devoted to analyzing concepts, most often in comparative terms, have recently begun to appear in Kyrgyzstan and worldwide. This is quite understandable because it is one of the effective ways of cognitive research, giving the complete reflection of the conceptosphere of the people in comparison with another similar mental phenomenon, reflecting a different national specificity. In this sense, the exponents of foreign cultural concepts used in the texts of works of fiction can serve as good material for research.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_94

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G. A. Madmarova et al.

Since the topic of foreign cultural concepts is very diverse and wide, and it is impossible to reveal it in one research, we will discuss ethnonyms in the text of a work of fiction, and more specifically, in Babur’s autobiographical notes “Baburnama” (Adzhi, 1998; Berezovich, 1985, p. 9; Faizullin, 2013, pp. 33–39; Madmarova, 2017, p. 284). In “Stars over Samarkand,” the famous Soviet writer S. P. Borodin very accurately conveyed this point of view, emphasizing it with appropriate vocabulary, various stylistic devices, and carefully chosen episodes of artistic and linguistic character (Borodin, 1968, p. 103).

3

Results

For the author, the peoples of Central Asia appear to be single ethnos living in one territory. He believes that these peoples speak not independent languages but dialects of one common Turkic language (except for the Tajiks). The names of ethnic groups are the names of tribes of one people, which can also be found in other authors, in particular, in “Baburnama” (Babur, 1954), where ethnonyms perform several functions, including the following: 1. Call ethnic communities; 2. Characterize the genetic composition of Babur’s empire; 3. Express the author’s attitude toward a particular tribe or nation; 4. Characterize the national characteristics of the peoples described; 5. Belong to proper nouns; 6. Speak of the author’s ethnicity. Here is what the author writes about Indians: “There is no great giftedness and savoir-faire among the Hindustani, no courtesy, no generosity and magnanimity . . .” (Babur, 1954, p. 335). Babur speaks very harshly of the Indians, forgetting that he captured a people with a completely different ancient culture, a different mentality, and different customs and traditions. His treatment of the Indians was unfair: it was hard to demand hospitality, generosity, and cordiality from conquered people. In “The Broken Sword” by T. Kasymbekov, at the enthronement of Sherali-khan, a young man is executed on white felt, and his blood is sprinkled on the felt. Later, Ishak, when he was elevated to the khans, forbade human sacrifice and ordered that animals be slaughtered. However, most of the beks perceived this as a consequence of the fact that Ishak was an illegitimate ruler, that he was of low birth: one man’s life meant nothing to a khan. It is also interesting that the compound names used in Babur’s narrative go back etymologically to different

languages, for example, Kara-Barlas – kara (Turkic) + barlas (Mongol); Sultan Hussein Argun – sultan (Arabic) + husein (Arabic) + argun (Mongol); Khudai Berdi Tugchi – khudai (Persian) + berdi (Turkic) + tugchi (Turkic-Mongol). Thus, we can reconstruct the genetic composition of the peoples who inhabited Central Asia in the Middle Ages, even in anthroponyms. The name of the chiefs of the tribes coincided with the name of the tribe, i.e., the ethnonym turned into the family name in the Tang chronicles (Malyavkin, 1981, pp. 103–104). Nevertheless, in our opinion, the reverse process could also take place: the name of the chief could become the name of the tribe (according to one version, the name of the tribe came from the name of Khan Uzbek in Uzbeks). The Kyrgyz, for example, still requires everyone to know their tribe and the names of their seven paternal ancestors. The nomadic way of life of the majority of the Turks might have influenced this. It was the clan community and tribe members who could help a man in case of enemies’ attacks, the loss of livestock, or starvation. The tribal group was not only a necessity, a norm of life, but also an indispensable condition of truly human, i.e., free existence. For the Turks, the one who does not know his tribe is a slave [rab/kul] (Akmoldoeva, 1996, p. 142). No matter how Babur expressed himself about the Mughals and Turks, he was aware of his belonging to these ethnic groups and was proud of it. He repeatedly stressed that he was a descendant of Tamerlane and the grandson of the Mughal ruler Yunus khan. Thus, Babur traces his ancestry straight back to Genghis Khan, though on his mother’s side. On his father’s side, he belonged to the Timurids. Consequently, Babur’s lineage was the highest among the khans of that time. His criticism of the Turks and Mongols is quite natural: each nation is well aware of its own shortcomings and virtues. Nevertheless, for the most part, Babur associates himself with the Turks, as is evident from his narrative. Turning to the Indians, Babur notes that the courage and swiftness of the Turks are such that Indians cannot match them (Babur, 1954, p. 342). As we can see, for Indians, Babur acts as a Turkic Muslim conqueror, covering his selfish goals by fighting for Islam.

4

Conclusion

Thus, we can draw the following conclusions: 1. Foreign-cultural concepts in the text of a work of fiction reflect a culture that is foreign to the reader and conveys multiple nuances of meaning inherent in it;

Ethnonyms as Concepts of Foreign Culture in the Text of a Fiction

2. To most researchers, the peoples of Central Asia appeared as a single ethnos living in one territory and speaking dialects of one language; 3. Ethnonyms in “Baburnama” have many functions related to the writer’s artistic intention; 4. The inclusion of ethnonyms in proper names is peculiar to the Central Asian peoples, who paid much attention to the person’s origin.

References Adzhi, M. (1998). The world of the great steppe. Mysl. Akmoldoeva, S. B. (1996). The ancient Kyrgyz model of the world. Ilim. Babur, Z. M. (1954). Baburnama. Academy of Sciences of the Uzbek SSR.

541 Berezovich, E. L. (1985). Language and traditional culture: Ethnolinguistic studies. Indrik. Borodin, S. P. (1968). Stars over Samarkand (Vol. 1: Topal Timur). : Soviet writer. Dmitriev, N. K. (1962). On Turkic elements of the Russian vocabulary. Academy of Sciences of the USSR. Faizullin, F. S. (2013). Ethnic consciousness and its forming factors. Herald of the Academy of Sciences of the Republic of Bashkortostan, 18(3), 58–65. Gadzhieva, N. Z. (1964). Problems of Turkic areal linguistics: The Central Asian areal. Nauka. Kornilov, O. A. (2003). Linguistic pictures of the world as derived from national mentalities (2nd ed.). CheRo. Madmarova, G. A. (2017). Intercultural concepts in the text of a work of fiction. Bishkek. Malyavkin, A. G. (1981). Historical geography of Central Asia (materials and research). Nauka.

Challenges Affecting Listening Comprehension in Professionally-Oriented English and the Strategies for Improvement (Railway Engineering) Yulia S. Kholmanskikh

Abstract

The paper touches upon peculiarities of the formation and improvement of listening skills at professionally-oriented ESL classes at a non-linguistic university. This paper includes a definition of listening as a lingua-psychological and educational phenomenon. The frequent linguistic, cognitive, and communicative challenges faced by ESL learners, such as the form of presentation of the audio, contact and distant types of listening, specific terminology and grammar, lack of paralinguistic information, multilevel classes, etc. are researched. This paper emphasizes the importance of developing listening comprehension skills that are essential for preparing a highly qualified expert in the professional field of transport logistics and economics who is competent enough to function effectively and deal with cross-cultural issues. Keywords

Listening · Listening comprehension · Professionally-oriented foreign language · Psychological cognitive process · Listening strategies

JEL Codes

Y80 · Z10

1

Introduction

There is no doubt that listening plays an essential role in language acquisition. According to N. Chomsky, it is one of the four major skills necessary to obtain linguistic competence (Chomsky, 1993). It is equally indispensable for Y. S. Kholmanskikh (✉) · I. Y. Bogatyreva Ural State University of Railway Transport, Ekaterinburg, Russia e-mail: [email protected]; [email protected]

and Inessa Yu. Bogatyreva

acquiring communicative competence (Hymes, 1972). Language as a system, in the simplest way, is understood as “the native speakers’ ability to formulate ‘well-formed sentences’” (Thornbury, 2006, p. 37). The actual use of language is understood as “a complex range of linguistic abilities underlying the capacity to communicate successfully, not autonomous but intertwined with other cognitive (and maybe also motivational and emotional) processes, and being integrated with other means of communication” (Vorwerg, 2015, pp. 140–141). In real communication, the share of speech perception by ear begins from 15% and depends on individual peculiarities whether a person is an auditory learner or not (Basova, 2000, p. 101). During ESL listening-comprehension classes, it is almost impossible to develop only the auditory skill one-sidedly. Working with audio texts, one simultaneously practices lexical, grammatical, and phonetic skills. Audio texts provide valuable information for discussion, which, in turn, presupposes further development of speech proficiency and writing abilities. Learners traditionally view listening comprehension as a demanding and complicated process. A survey conducted among students in the master’s degree program at USURT has shown that 71% of the respondents pointed out that listening presents more difficulty than speaking, reading, or writing. Moreover, 43% said that they are sometimes unable to get the meaning of a spoken word while immediately recognizing it in the written form. More than half of the students stressed that it is challenging for them to include the material acquired through listening comprehension in further professional communication. It reveals barriers of listening comprehension experienced by students specializing in transport logistics and economics during the classes of professionally oriented English language. Moreover, the paper aims to offer some suggestions for overcoming these difficulties through effective techniques. First, it is essential to give a general definition of abilities and skills forming the basis of effective listening

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_95

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comprehension. Second, the main modes of auditory perception of educational information are described. Next, the research dwells upon the constituent parts of the listening comprehension process.

2

Materials and Methods

It may safely be said that the efficiency of language learning depends on how much students read and listen to the foreign language. As the most commonly used language skill, listening influences language development more than the other three English skills. As a psychological phenomenon, listening occurs in three cognitive psychological processes: input processing, system change, and output processing. The first part of listening and speech perception activities is selective attention. In this process, metacognitive psychology’s ability to regulate cognitive behavior can enhance students’ concentration. After the speech input condition is recognized, a condition for attention and comprehension arises, and thus the speech is stored in the student’s working memory (short-term memory). The second part of the psychological process of listening comprehension is memory. The third part includes absorption and reconstruction. In accordance with the psychological cognition model, the student decodes, reconstructs, absorbs, and understands the listening task. It is the active cognitive process of listening to students where metacognitive psychology has a positive adjustment effect on the enthusiasm and interest of listening students. The last part is automated processing. It is the use of listening skills that enables students to spend less time and occupy less working memory to assimilate familiar listening content. Consequently, long-term listening practice and cognitive activities can improve listening psychology processing ability (Chen, 2020). Inferencing is considered to be the key process here. For example, when listening to the phrase “the economic impact of the coronavirus,” students will activate facts about the pandemic and pay special attention to how COVID-19 has led to the dampening of economic activity, unemployment, and reducing the labor force worldwide. The main task of students is to understand the general idea of the listening selection without focusing on specifics (words, grammatical structures, etc.) (Newton & Nation, 2021). The listeners have to concentrate on specific details, individual words and phrases, and unfamiliar vocabulary or structures, which is vital to understanding the entire meaning of the conversation or other types of listening. The success of the listening comprehension process depends not on a single “top-down” or “bottom-up” process but on the ability to combine these two modes to become more efficient listeners (Douglas Brown, 2004).

To provide efficient listening for students: 1. Pre-listening background-based knowledge, and make the students aware of what they will listen to. These activities include the following types of tasks: setting the context, arousing interest, activating current knowledge, activating vocabulary or language, predicting content, and checking or understanding listening tasks. For example, it is possible to introduce the title of the text and suggest posing questions to make assumptions about its content. A group discussion based on questions prepared in advance may also prove quite practical. 2. While-listening activities concentrate on the main listening. The most common activities are completing dialogues or texts, filling in gaps, matching, finding mistakes, and searching for information. They mostly involve questions and answers, choosing a true-false statement, ticking items, summarizing, and discussing the text (Cotton et al., 2011).

3

Results and Discussion

Although the problem of teaching listening skills to ESL students has received profound consideration in the methodical and pedagogical literature, this paper discovers that many students still have much difficulty in mastering spoken speech comprehension. The difficulties arise primarily due to the conditions of perception, such as one-time and shortterm presentation of the material. Scientists distinguish communicative listening, the purpose of which is to understand foreign oral speech presented just once (Azimov & Shchukin, 2009, p. 101). The speaker’s tempo of speech also refers to perceptive difficulties. For example, the average tempo of a native Russian speaker is 240–260 syllables per minute, which, on the whole, coincides with the average rate of English speech (250 syllables per minute) (Azimov & Shchukin, 2009, p. 305). Troubles begin when the mechanism of internal pronunciation lags behind the speed of information presented or when it is much faster. In the first case, students tend to lose the thread of what they hear. In the second case, the attention of students weakens. In both cases, it is challenging to put the constituent parts of the utterance together. It is considered optimal for listeners when the tempo of educational material corresponds to the tempo of their native speech. It is possible to overcome this problem by increasing the length of pauses between the semantic parts of the text. There are also difficulties associated with the form of presentation of the audio text. Almost a third of students in the master’s degree program at the USURT pointed out that monologues are easier to understand compared to dialogues and group discussions; among monologues, story-based texts are more understandable than descriptions. In general, high

Challenges Affecting Listening Comprehension in Professionally-Oriented English and. . .

tones, such as children’s or women’s voices, are perceived worse than low tones. The next problem results from the source of listening. Researchers distinguish between contact and distant listening (Galskova & Gez, 2009, p. 161). Contact listening is an integral part of interactive communication. In turn, distant listening implies the indirect perception of information (e.g., through television, audio recording, multimedia broadcasting on the Internet, etc.). This type of communication is an independent form of social interaction with its own characteristics and challenges. Due to the objective reasons (one of them being distance learning introduced in many educational institutions due to the global COVID-19 pandemic), distant listening became the main type of listening comprehension in ESL classes at a non-linguistic university. Audio recordings and podcasts (episodic series of digital downloadable audio files) provide a convenient way to present language material in professionally-oriented ESL classes (Schuller et al., 2013). In this case, it is possible to present a photograph or a series of photos explaining the situation in more detail. The task may be to arrange pictures in the correct order either according to the listened text or as a pre-listening task aimed to predict the topic. Another way out may be to look for a video fragment dealing with the same situation and demonstrate it before the audio. Moreover, the current development of new information technologies has dramatically reduced the need for listening comprehension without visual support. Thus, for example, there are various types of video calls and conferencing instead of telephone conversations. For example, in the process of studying logistics services, one can show a short video clip “A vision on the future of European logistics”, “a Brussels-based trade association that represents nine members which are all related to the logistics sector, either as users, providers, or customers” (The Alliance for European Logistics, 2011). The tasks can include filling in the gaps with a suitable term: “A quick check online confirmed that the box was with a ___ (courier). E-customs and single ___ (transport documents) will have an increased supply chain security and efficiency. E-commerce opens the door to _ (trade).” It has also proved effective after the sufficient introduction of all terms to turn off the sound and ask students to “voice” the video sequence using their notes. A person remembers “15% of the information that he or she receives through speech and 25% in visual form; if both of these methods of transmitting information are used simultaneously, a person can perceive up to 65% of the content of this information” (Tovazhnyansky et al., 2005). However, several techniques may be suggested to manage a classroom to teach students with varying levels of listening comprehension productively. For example, it is possible to offer multi-level tasks that vary from the easiest ones up to the most thought-provoking. After listening to a fragment on

545

the topic “Introduction to Logistics,” students with basic knowledge may be offered to fulfill a traditional multiplechoice test with questions on a general understanding of the contents. In turn, students with better knowledge can be offered to choose from a list of quotes the one that illustrates the idea of the fragment and provide the reasons for such choice: • “The line between disorder and order lies in logistics . . .”; • “My logisticians are a humorless lot . . . they know if my campaign fails, they are the first ones I will slay.”; • “Creativity is an import-export business.” (Vaschenko & Kholmanskikh, 2020). It has also proved rather effective to offer students with basic knowledge a printed text based on listening comprehension without initial syllables of the keywords. The task is to insert these syllables and, in the end, to use the keywords to convey the content of the text. It is important to explain to the students that keywords mainly occur at the beginning of the text, can be repeated several times, and stand out in voice and intonation. The English language began to develop according to the “law of economy of speech means,” many forms of regional dialects are being unified; lexical phenomena are reduced, grammatical forms are simplified, pronunciation becomes easier, and phonetic increases variability (Osipyan et al., 2021). Another difficulty arises because globalization and freedom of movement oblige a qualified professional to deal with different accents and peculiarities of vocabulary. Traditionally, schools and universities prefer teaching mainly British English, but it is more challenging to perceive regional and dialectal pronunciation. These features may be crucial in formal and non-formal communication. For example, a teacher can use the educational and methodological complex Oxford English for Logistics and open Internet sources (Grussendorf, 2013). It is advisable to draw their attention to understanding the intentions of the communicants, their social status, and presuppositions for the dialogue and its context. Thus, learners can understand the ways of expressing different intentions and develop models of their generation. Another stumbling block to mastering listening comprehension skills is the students’ wish to understand every word while the main idea remains vague and unclear. A survey conducted among students in the master’s degree program at the USURT has proved that 86% of respondents do not always perceive clear boundaries between words. They also tend to catch the sense of separate fragments while losing the idea of the whole text. Learners either try to recall the meaning of a word or remember the previous one, which can seem particularly challenging because professionally-oriented classes are centered around specific terminology. It may seem

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mistakenly familiar but acquires a different sense in the given professional field: a duty, third-party logistics, a cherry picker, lead time, a blanket order, etc. The presence of homonyms in the perceived information falls under the same category (words belonging to the same part of speech and sounding the same but different in meaning). For example, in transport logistics, students sometimes mix up the following words: a ship (a large boat)—to ship (to send something far away); customs (the place at the border where travelers’ bags are examined)—customs (the plural of traditions), etc. The use of lexical units in a figurative sense also hinders understanding: to keep an eye on the budget, tailored logistic solutions, etc. Linguistic difficulties distract the listener from the content, making it difficult to understand the general idea. It is also possible to actualize the terms before the listening procedure in the form of a discussion on the topic or a dictation. Another possible recommendation to overcome the difficulty connected with vocabulary usage is to limit the translation into the native language. Many participants in the educational process consider it the easiest way to acquire language skills, but if students have to constantly resort to translation, they tend to lose confidence when coming across an unfamiliar word. There are cases when finding an equivalent from the first language is the only method to memorize the term. However, it is better to provide the context that illustrates the meaning of the vocabulary unit, show students pictures, or suggest English synonyms, antonyms, or definitions (e.g., matching exercises). For example, while studying the topic “Shipping goods,” it would seem more efficient to show conventional symbols of international standards of marking products instead of translating word combinations or show a layout of a typical storeroom while studying warehousing operations and suggest students to label all warehouse areas. One of the most productive techniques is the Hot Seat game. It is designed to activate vocabulary and improve listening skills and unprepared speaking skills. The group of students is divided into subgroups (preferably two; the number of subgroups can be increased if the group is large). Both subgroups of students sit facing the board. The instructor puts two empty hot chairs in front of the teams—one for each. A member from each team will then sit on the appropriate chair facing his or her teammates, with his or her back to the board. The teacher prepares in advance a list of vocabulary units that are actualized in this lesson, which he or she sequentially writes on the board. The goal of the method is for the members of the subgroup to describe this word using synonyms, antonyms, definitions, etc. The student on the hot chair listens to teammates and tries to guess the lexical unit written by the teacher on the blackboard. The first student to pronounce the hidden word wins a point for the team. The

Y. S. Kholmanskikh and I. Y. Bogatyreva

students take turns sitting on the hot chair, so each of them is involved in both roles.

4

Conclusion

It may be safely said that the efficiency of language learning depends on how much students read and listen to the foreign language. Being the most commonly used language skill, listening has a more significant influence on the development of language than the other three English skills. This paper demonstrates that listening comprehension is a complicated process. There is no universally valid method to cope with all the above challenges. Teachers are supposed to teach students appropriate listening strategies. Listening activities should be organized from basic to advanced levels as students master English. Listening skills are essential for learning a foreign language because listening is a basic language skill. Strategic knowledge can assist students in solving listening problems.

References Azimov, E. G., & Shchukin, A. N. (2009). New dictionary of methodological terms and concepts (theory and practice of teaching languages). IKAR. Basova, N. V. (2000). Pedagogy and practical psychology: Textbook. Phoenix. Chen, X. (2020). Psychological process of English learners in listening comprehension. Revista Argentina de Clínica Psicológica, 29(2), 710–716. https://doi.org/10.24205/03276716.2020.300 Chomsky, N. (1993). Language and thought. Moyer Bell. Cotton, D., Falvey, D., & Kent, S. (2011). Market leader: Intermediate business English course. Pearson. Douglas Brown, H. (2004). Language assessment principle and classroom practices. Longman. Galskova, N. D., & Gez, N. I. (2009). Theory of teaching foreign languages. Linguodidactics and methodology. Akademiya. Grussendorf, M. (2013). Oxford English for logistics. Oxford University Press. Hymes, D. H. (1972). On communicative competence. In J. B. Pride & J. Holmes (Eds.), Sociolinguistics. Selected readings (pp. 269–293). Penguin. Newton, J. M., & Nation, I. S. P. (2021). Teaching ESL/EFL listening and speaking (2nd ed.). Routledge. Osipyan, T., Osipyan, K. G., Bogatyreva, I., Demidova, E., & Daramilova, Z. (2021). New trends in English against the backdrop of linguistic studies. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (pp. 607–614). Springer. https://doi.org/10.1007/978-3-03069415-9_70 Schuller, B., Steidl, S., Batliner, A., Burkhardt, F., Devillers, L., Müller, C., et al. (2013). Paralinguistics in speech and language – state-ofthe-art and the challenge. Computer Speech and Language, 27(SI1), 4–39. Retrieved from https://sail.usc.edu/publications/files/1-s2.0s0885230812000162-main.pdf (Accessed 12 December 2021). The Alliance for European Logistics. (2011, October 12). A vision on the future of European logistics [Video file]. Retrieved from https://

Challenges Affecting Listening Comprehension in Professionally-Oriented English and. . . www.youtube.com/watch?v=o0iz3llVPL8 (Accessed 3 December 2021). Thornbury, S. (2006). An A-Z of ELT. Macmillan Education. Tovazhnyansky, L. L., Romanovsky, O. G., Bondarenko, V. V., Ponomarov, O. S., & Chervanova, Z. O. (2005). Fundamentals of higher education pedagogy: Textbook. : NTU KhPI. Retrieved from https://buklib.net/books/36683/ (Accessed 3 December 2021).

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Vaschenko, I. V., & Kholmanskikh, Y. S. (2020). Advanced foreign language at an intermediate level. USURT. Vorwerg, C. (2015). Communicative competence, linguistic aspects. In J. D. Wright (Ed.), International encyclopedia of the social and behavioral sciences (2nd ed., pp. 294–301). Elsevier. https://doi. org/10.1016/B978-0-08-097086-8.53042-6

Translation of Structures with Social and Grammatical Gender in the English Language (Based on Feature Film Scripts) Murad A. Ibragimov

Abstract

JEL Codes

The paper analyzes the features of the transmission of gender-marked language structures in translation from English into Russian. The research object is the linguistic manifestation of gender-generic relations in the text of feature film scripts and their translation. The author describes the structure of scripts, which, in order to express the emotionality of the characters, must contain the relationship of events, descriptions of the environment, and brief notes. At the level of translation analysis, the author presents strategies, methods, and methods of translation, considering social and grammatical gender relations in the language. When translating, it is necessary to qualitatively convey the interpretation and understanding of the system and norms of the text of the source language, along with an explanation of its linguistic structures. The paper considers contemporary approaches to understanding the correlation between the semantic category of gender and the socio-cultural category of gender, which are especially significant in translation activities in the film industry. It should be noted that within the framework of the spread of globalization and the struggle for political influence between women and men, gender manifestations in the language in the context of socio-political discourse become the starting point for controversy. An appropriate understanding of the extralinguistic realities of the social and grammatical gender structures of the language will help the translator create an image that is as close as possible to the original and does not contradict the socio-cultural realities of the country of the target language.

Z13 · J16

Keywords

Social gender · Society · Translation · Grammatical gender · Script · Movie · Language M. A. Ibragimov (✉) Pyatigorsk State University, Pyatigorsk, Russia

1

Introduction

The translation is a complex, cumulative process that includes many activities based on other disciplines related to language, writing, linguistics, and culture. As a means of communication, translation plays an important role because the translated text must convey the same intentions as the original. To achieve this goal, translators must develop their linguistic competence; that is, translators must be aware that differences between language construction and language use can affect the message of the text. In addition to conveying the semantic information contained in the text, denotational meanings, and emotional and stylistic connotations, the translator must consider the communicative intent of the author, the type of audience for which the message is intended, and socio-psychological characteristics and background knowledge of this audience. A process driven by so many variables cannot have a single outcome. Moreover, the synonymic and paraphrasing potential of the language is so high that there can be several ways of describing the same extralinguistic situation, and even if they may not be exactly identical, the differences can be neutralized by the context. It should also be remembered that the translator’s decision may vary depending on the receptor and the purpose of the translation. Most authors of the translation theory agree that before starting any translation, the translator should analyze the text comprehensively because this is the only way to convey an adequate perception of the source text. The problem of the correlation of social and grammatical gender relations in the translation of feature films from English into Russian is still relevant. Even though it is being studied from different perspectives (linguistic,

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_96

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psycho-linguistic, social, cultural, anthropological, etc.), a universal solution has not yet been found. In connection with the growing world political, social, and economic transformations, the semantic realization of gender roles is also subject to a certain transformation. In many countries, it is generally accepted that men and women have incompatible, opposite personal and behavioral characteristics. The male gender appears as aggressive, strong, independent, intelligent, and creative, while the feminine is submissive, emotional, conservative, and weak. Currently, the definition of masculinity only as “male” and femininity as “female” is stereotypical and forms false conservative ideas (Ibragimov, 2009). Speaking about the origin of the text of scripts, let us turn to the etymology of this language unit. “Script” goes back to the Latin scriptum—scripture, text. A script or screenplay is the written work of screenwriters in a film or television production. According to tradition, the script is like a play, in which all the plots and dialogues of the characters are described in detail with notes. It can sometimes represent an adaptation of a separate literary work for cinema, in which case the novel’s author acts as a screenwriter (screenwriter). It is divided into sequences or scenes and the actions and dialogues that take place between characters (Metz, 1974). The following main elements are distinguished in the script: descriptive part (script prose, notes, or stage direction), dialog, credits, and voiceover. A well-written literary script must convey all information necessary (theme, plot, issues, and characters of the main characters are defined) so that readers can visualize the full development of the film in their imagination: how the dialogue proceeds, how the characters act, and what objects they interact with. Typically, a script describes all elements (audio, visual, behavioral, and dialogue) needed to tell a movie story. The script also contains the relationship of events, descriptions of the environment, and any brief notes that can be made to describe the characters’ emotions. Over time, certain format requirements in scripts have been standardized. These requirements, which the film industry expects to find in a professional script, range from typography to margins to how scene changes are marked.

2

Methodology

The text translation strategy is an essential aspect of the translation analysis of the text. In recent decades, extensive research has been carried out in the field of translation strategies. However, each author reflects their own position in the description.

A translation strategy is a model of translation implementation based on the translator’s general approach to translation in a specific communicative situation, formalized by the specific circumstances of this situation; a translation goal that clarifies the application of the translator’s professional skills within a specific situation. When translating, syntactic analysis is also important because the order of sentences in English does not always coincide with the same order in Russian. For example: (1) And, what he did was, he started up his club called the Ku Klux Klan—“И он был человеком, который основал клуб Ку Клукс Клан” (Roth, 1992). We see that for the convenience of translation, there is a simplification of the introductory emphatic construction “what he did was.” An important role is played by the analysis of the genre of the translated text. Genre analysis aims to explain the sociocultural, institutional, and organizational limitations regarding communication, as well as to identify common patterns in communication. Taking into account the lexicological aspect, translators must be aware of the formation of words in the languages with which they work, as well as of the semantic relationships between these words, primarily in specialized contexts (Karpov, 2003; Zaretskaya, 2010). Language units expressing social and grammatical gender relations are analyzed using the cognitive-semantic approach. Cognitive semantics is a field of study that examines the relationship between human experience, the conceptual system, and the semantic structure encoded in language (Ibragimov, 2009). The direct object of study of cognitive semantics is the conceptual content of language, or how human thinking uses language in its connection with meaning or sense (Croft & Cruse, 2004).

3

Results

The period of the previous few decades of translational analysis is marked by the concentration of a large amount of scientific research and literature around the concept of “sex” or “gender.” L. Chamberlain notes that many issues related to gender in translation practice can be divided according to the type and kind of source text, language, cultural tradition, and other features (Chamberlain, 1988). The translation process includes the entire linguistic context, text analysis, the amount of translation and any information and facts: • Socio-economic situation (role, status, and economic condition) • Socio-cultural and cognitive-intellectual context (text and world knowledge, education, experience, and structures of reality)

Translation of Structures with Social and Grammatical Gender in the English Language. . .

• Biographical-psychic conditions (individual abilities, dispositions, current curriculum vitae, and intentions) Gender translation usually raises some concerns among translators when translating from source languages where biological gender is grammatically different from the target language. Often, these difficulties are more pronounced when the grammatical gender matches the gender of the object’s referent. To consider this issue, we can turn to the film “Forrest Gump.” Reading the script of this film, one often encounters gender-specific occupational names, such as a nurse, milkman, anchorman, doctor, newsman, policeman, and weatherman. Some of these job titles have female variants because women did not traditionally hold the positions in question. Consider: (2) A milkman steps down from the porch—“Молочник спускается с крыльца” (Roth, 1992). As is known, the profession “milkman” is characteristic of the male sex; therefore, it is translated as “молочник” [milkman] and not “молочница” [thrushmaid]. Watching Englishlanguage films, one can hardly notice a woman carrying milk because this profession is considered primordially masculine. However, in Russia, this profession is mainly performed by women. In this regard, it is worth considering the country and its cultural values when translating the names of such professions. After years of debating this issue, some gender-based positions are falling out of fashion. Barman and barmaid have become bartenders, a firefighter is now used instead of a fireman, and there is still a push to replace a mailman with a more widely known word such as post worker or letter carrier. There are also cases where there is a specific feminine form, but the main (or “masculine”) form does not indicate a male and can apply equally to any member of a particular profession, male or female. Examples include actor and actress [актёр и актриса]; usher and usherette [билетёр и билетёрша]; comedian and comedienne [комик и комедийная актриса]. Consider the translation of the following sentence: (3) But his back is as crooked as a politician—“Но его спина такая кривая, каким бывает политик” (Roth, 1992). At first glance, the translator will not be able to understand why the crooked back is associated with a politician. When studying the definition of the adjective crooked, which has three meanings (1. bent, twisted; 2. at an angle, angled, tilted; 3. dishonest, criminal, illegal) (Crooked, n.d.), we can conclude that a figurative comparison of human curvature is used as a deviation from traditional values. In this case, more interesting for us is the correlation of the social and grammatical gender of the referent of the word “back” with the referent of the word politician. Based on the meaning of the word “back,” as a powerful and strong organ of the body that

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supports the body in its functioning, the politician also expresses “support” and “strength.” However, a straight back is considered standard and healthy for a person, and curvature is a disease. Respectively, a politician who does not adhere to traditional values, morality, and disposition can become deceitful and corrupt. Therefore, the translation of our example can be presented as an addition: “Но его спина такая кривая, каким бывает политик—лживый и коррумпированный” [But his back is as crooked as a politician can be—lying and corrupt]. When translating the script of the film “Non-Stop”, the following example can be distinguished: (4) Flight attendants, please be seated for takeoff—“Борт проводникам занять места для взлёта” (Richardson et al., 2014). In this case, in order not to focus on the field of the employee, a gender-neutral word such as flight attendants is used instead of steward or stewardess. Flight attendants became associated with the negative impression that they served as nothing more than models in the sky. The drive to eliminate gender bias in job descriptions in the 1960s and 1970s, combined with an increase in the number of men tripling to work, made the term “flight attendants” more appropriate and preferred. Nowadays, this term is recognized internationally and is used in life much more often. On the other hand, due to gender stereotypes and the increased attention this issue has received, there are some names that were not originally gendered, which we tied to gender: for example, male nurse (nurse), female judge (judge), or male model (model). Referring back to the film “Forrest Gump,” consider the following example: (5) The male nurse sets Lt Dan down on the rolling bed (Roth, 1992)—“Санитар усаживает лейтенанта Дэна на раскладушку.” In this example, the author, on the contrary, wanted to pay attention to the gender of the character. Another interesting fact is that in English, nouns denoting ships, such as ship and boat, are usually expressed with the pronoun she and therefore are feminine. As an example, let us turn to the film “Adrift,” where such examples are quite common. The main characters, when talking about the boat, throughout the film, use the possessive pronoun “her”: – – – –

(7) All on this boat?—“И всё на этой лодке?” Uh, just me and her—“Да, только мы вдвоём” Where did you find her?—“Где ты её нашел?” I actually built her, when I was working in a boat yard in South Africa (Kandell et al., 2018)—“Я построил её сам, во время работы на верфи в Южной Африке.” – Do you want to take her out? (Kandell et al., 2018)—“Хотела бы выйти на ней?”

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So why is it customary to classify ships as feminine? Indeed, the ship in the Middle Ages was considered a masculine object. However, by the sixteenth century, the third person singular pronoun “she” was assigned to the referent of this object, and ships started to be perceived as objects with feminine/feminine characteristics (Bloch, 1976; Ganshina & Vasilevskaya, 1964). Studying contemporary English, we note that the referent of any sea vessel, mainly in works of art, corresponds to the pronoun “she.” One plausible theory is that boats are traditionally given female names, usually the name of an important woman in the boat owner’s life, such as his mother. It has also been suggested that all ships were once dedicated to goddesses and later to important mortal women when belief in goddesses waned. The second theory points to the existence of grammatical gender in most Indo-European languages. While contemporary English hardly has any grammatical gender, limited for the most part to natural gender cases, such as the nouns “woman” and “man” called “she” and “he,” there is evidence that English once had a more extensive gender system similar to that of languages such as German and French (Bloch, 1976; Rosario, 1972; Quirk et al., 1982). Some scientists offer the following explanation: there is always a lot of fuss around the ship; there is usually a crowd of male sailors who look after it and the captain who leads it forward. It takes a lot of paint to keep it beautiful and a skilled person to handle it properly. And without a man at the helm, a ship is absolutely uncontrollable. As they say—“It is not the initial expense that breaks you, it is the upkeep”—“It is not the upfront expenses that will break you, but the further maintenance.” That is why the ship is often associated with a woman. More recently, advocates of gender-neutral or non-sexist language have suggested naming ships the same as any other inanimate object. The same goes for cars. Usually, the use of “she” or “he” means a special personal relationship to the object. In the film “Leap Year,” we can trace the following example: (8) I will have you know that is a Renault 4. She is classic! (Elfont & Kaplan, 2018).—“Имей ввиду, это Рено-4. Классика!” Both the character in the film and many other men become obsessed with their cars, and it becomes a source of pride for them, in connection with which they treat their car as an animated object. However, contemporary English does not allow for a clear dividing line between personified objects (i.e., animate), which correspond to the pronouns “he” or “she,” and inanimate, traditionally correlated with the third person singular pronoun “it.” The pronoun “it” in English is also used in

M. A. Ibragimov

relation to a small child or animal if the gender of the animal or child is unknown to the speaker. Cases are indicative when the speaker shows interest in a particular child or animal and tries to specify their gender. As for animals, in films, we can often find the pronouns “he” and “she” in relation to our smaller brothers. In the film “Marley and Me,” the main characters treat their dog not as an animal but as a family member; he becomes a close friend to them, as a result of which it would be foolish to call him using the pronoun “they.” Consider the following example: (9) He just wants to say hello here. He loves people (Frank & Roos, 2008)—“Он просто хочет поздороваться с тобой. Он любит людей.” Therefore, it is certainly fair, given a pet’s ability to love, think, be sad, rejoice, and yearn, it is impossible to use a singular third-person pronoun “he” to denote an animal. We see the same example in the film “Monte Carlo.” In this film, the girl, having become attached to the horse and, of course, distinguishing it from the general mass, endows it with human qualities, using the pronouns “he” and “she”: (10) Is it all right if I take her? I would love to brush her down. Is not she a beauty? (Bezucha et al., 2011)—“Могу я её взять? Я её почищу. Разве она не красотка?” However, when translating some feature films, in particular gender pronouns, we are faced with the problem of correct transmission of contextual information. So, for example, in the film “The Meg,” the protagonist uses the pronoun “he” in relation to the shark. Since imagining a shark, we subconsciously draw the image of a large predator. The same characteristic can be attributed to people, namely to the male sex. Unconsciously, a person attributes everything large and fearful to men, and women are considered to be fragile and vulnerable. Therefore, at a moment of emotional stress, the hero of the film used exactly “he” when talking about a shark, letting us know that he was scared and did not expect anything “cute” and “fragile” from this creature. This stereotype is caused by a long-term patriarchal system and is now only vestiges of the past. When translated into Russian, the meaning of his exclamation is lost because in Russian, all words, one way or another, initially have a gender. Therefore, no word can be gender-neutral, and, as a result, the meaning of translation from one language to another is lost. From this, we have the following: (11) You are down there and you make him angry. Now he will kill us (Georgaris et al., 2015)—“Вы были там, и вы разозлили её. Теперь она вернётся и убьёт нас.” To keep the meaning, the following translation can be offered as an alternative: “Вы были там, и вы разозлили этого монстра. Теперь он вернётся и убьёт нас.”

Translation of Structures with Social and Grammatical Gender in the English Language. . .

4

Conclusions

Translators, as linguistic and communication intermediaries, should understand the structure of the text in the source language so that to decode the message and simultaneously encode it in the target language. Sometimes translators cannot find a suitable linguistic resource in the target language that conveys the message correctly. Therefore, as linguistic and communicative intermediaries in both languages, translators can use neologisms that allow them to solve language problems (such as lack of equivalence, an abundance of equivalence; semantic problems—problems associated with a lack of knowledge of the semantic coverage of some language means in the original language; practical problems—lack of knowledge about the pragmatic value of linguistic means available in the source language). Text analysis during translation should be carried out not only at the linguistic level but also to explore the pragmatic value of the text. This is essential because it is not the words or sentences that are important for constructing the text but the interpretation of this text by the translator. Based on the analyzed feature films, the following lexical means for expressing gender in English can be distinguished: • Pronominal correlations—the use of personal pronouns “he,” “she,” and “it” (a person can be replaced by “he”) • Word combination: male nurse, female judge, male model • Personification is a stylistic device when human properties are attributed to inanimate objects: a ship—she, a car—she In order not to focus on the gender of a person, gender-neutral words are often used, for example, flight attendant, firefighter, bartender, mailman, post worker, or letter carrier. Even though in English it is customary to use the pronoun “it” when describing animals, in most feature films, the main characters, endowing their pet with the ability to love, think, be sad, rejoice, and yearn, use the pronouns “he” or “she.” Thus, the task of translation becomes a complex process when linguistic or non-linguistic elements give the text that nuance that makes it unique. For this reason, translators must demonstrate that they have developed both linguistic and communicative competence in the languages used in their translation activities to solve possible problems that they may encounter during their professional practice.

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References Bezucha, T., Blair, A., & Maggenti, M. (2011). Script for “Monte Carlo” (based on Headhunters by J. Bass). Retrieved from https://www. scripts.com/script-pdf/14022. Accessed 15 Mar 2022. Bloch, M. Y. (1976). Questions of studying the grammatical structure of the language: Textbook. Moscow State Pedagogical Institute. Chamberlain, L. (1988). Gender and the metaphorics of translation. Signs, 13(3), 454–472. https://doi.org/10.1086/494428 Croft, W., & Cruse, D. A. (2004). Cognitive linguistics. Cambridge University Press. Crooked. (n.d.). In Collins Dictionary. Retrieved from https://www. collinsdictionary.com/dictionary/english/crooked. Accessed 2 Apr 2022. Elfont, H., & Kaplan, D. (2018). Script for “leap year.” Retrieved from https://www.scripts.com/script-pdf/12359. Accessed 15 Mar 2022. Frank, S., & Roos, D. (2008). Script for “Marley and Me” (based on the book Marley & Me by J. Grogan). Retrieved from https://www. scripts.com/script-pdf/13399. Accessed 15 Mar 2022. Ganshina, M. A., & Vasilevskaya, N. M. (1964). English grammar. Vysshaya shkola. Georgaris, D., Hoeber, J., & Hoeber, E. (2015). Script for “The Meg” (based on Meg: A Novel of Deep Terror by S. Alten). Retrieved from https://www.scriptslug.com/assets/scripts/the-meg-2018.pdf. Accessed 15 Mar 2022. Ibragimov, M. A. (2009). Categorical-semantic grammatical gender opposition “male/female,” verbalized by means of modern English. Bulletin of the Moscow State Open University, 2(35), 71–74. Kandell, A., Kandell, J., & Branson Smith, D. (2018). Script for “Adrift” (based on the book Red Sky in Mourning by Tami Oldham Ashcraft). Retrieved from https://www.springfieldspringfield.co.uk/ movie_script.php?movie=adrift. Accessed 15 Mar 2022. Karpov, V. A. (2003). Language as a system (2nd ed.). URSS. Metz, C. (1974). Film language: A semiotics of cinema (M. Taylor Transl. from French). Oxford University Press. Quirk, R., Greenbaum, S., Leech, G., & Svartvik, J. (1982). A university grammar of English. Longman. Richardson, J. W., Roach, C., & Engle, R. (2014). Script for “non-stop.” Retrieved from https://www.scripts.com/script-pdf/14916. Accessed 15 Mar 2022. Rosario, C. (1972). Ninguneo verso de la colección de poemas Poesía no eres tú. Retrieved from https://www.poesiacastellana.es/poema.php? id=NINGUNEO&poeta=Castellanos,%20Rosario. Accessed 11 Mar 2022. Roth, E. (1992). Script for “Forrest Gump” (based on a novel by Winston Groom). Retrieved from https://www.imsdb.com/scripts/ Forrest-Gump.html. Accessed 5 Feb 2022. Zaretskaya, A. N. (2010). Features of the implementation of subtext in film discourse (Synopsis of dissertation of candidate of philology). Chelyabinsk State University.

Humanistic Philosophical Foundations of Social Work Omurzak S. Akmatov

Abstract

JEL Codes

The paper provides a scientific and conceptual analysis of the humanistic and philosophical foundations of social work, the place of philosophical anthropology, and the conventionality of philosophical reflection in addressing them. The author considers the importance of philosophical conceptual apparatus in the process of social work, the development of philosophical methodology, and the choice of valuable sociocultural traditions. The author reflects on the possibility of in-depth analysis of human beings and humanistic philosophy during social work, its universality and uniqueness, and social and spiritual essence. In particular, it is revealed that the disclosure of the existential essence of a person belongs to humanistic philosophy. The research shows the mutual unity of sociocultural and socio-natural phenomena, rationality and irrationality; philosophical temporalism and relations to the world, uniqueness and universality, limitedness and limitlessness, duty and responsibility; philosophy of suffering, reconciliation, agreement, salvation, life essence and events, spiritual situations, etc.—the philosophical conceptual apparatus of social work. The author reveals the desire of philosophical anthropology for an in-depth analysis of the multifaceted problems of a person.

Q01 · Z13

Keywords

Social work · Humanistic philosophy · Philosophical anthropology · Philosophical reflection · Philosophical methodology · Sociocultural values · Existential philosophy · Sociocultural and socio-natural phenomena · Philosophical temporalism · Uniqueness and versatility

O. S. Akmatov (✉) Osh State University, Osh, Kyrgyzstan

1

Introduction

As V. F. Shapovalov noted, “...the fate of the world ultimately depends on questions of the spiritual order” (Shapovalov, 1998, p. 559). Nowadays, when mass culture is perceived as a negative phenomenon within the framework of postindustrial society of the world development, especially in the conditions of social disasters of today’s life such as criminality, extremism, and terrorism, which, in turn, cause drug addiction, alcoholism, prostitution, abuse, and suicide, humanistic philosophy is the relevant problem of transient condition of Kyrgyz society. The leading global problems of the twenty-first century condition the thinking of humankind at the level of a unified philosophical reflection on the universe. This includes the following: • Due to the increase in the world’s population (up to nine billion people by 2025–2030), a food shortage is predicted, and an increase in the amount of food produced by 50% by 2025 • The shortage of clean drinking water, the emergence of water disputes in the Himalayan region—China, India, and Pakistan; Palestine and Israel; Central Asian countries—Uzbekistan, Tajikistan, Kazakhstan, Kyrgyzstan, etc. • The shortage of energy resources (gas, oil) creates social tension • Climate issues—rising average earth temperatures, floods, landslides, and other emergencies lead to unsustainable social life Being a determinant of the social problems of humankind, these global problems lead to a material-social crisis and then

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_97

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to a spiritual-existential crisis. Such social crises, giving impetus to a change in values, condemn people in the “struggle for life” to various mental depressions, stresses, impotence, and powerlessness. Thus, in the dialectical context of macrocosm and microcosm to socio-natural and sociocultural relations of a person and the universe, depending on the biosocial and spiritual significance, global problems require thinking at the level of constructive philosophical reflection. This requirement necessitates a scientific-conceptual analysis of the place of philosophical anthropology within the professional issues of social work. Along with the inclusion of all philosophical spheres, the philosophy of social work constitutes a dialogue on such issues as the phenomenon of a person, the multiplicity of human existence, its characteristics, and the meaning of human life. The philosophical methodology of social work theory on the humanization of the individual is aimed at the humanistic integration of all aspects of social work, sociocultural formation of the individual, and harmonious development. All sciences directed at the human being, within the framework of its humanization, have their own specific branch or situational features. In this context, today’s philosophy, along with the integration of all sciences, stands out in the direction of anthropologization. It seeks to make sense of the multifaceted view of the world through the phenomenon of a person. Whatever the position of traditional philosophy, the study of its anthropological foundations is the content of today’s philosophy. Philosophical anthropology includes in its scope many aspects of the anthropogony of human existence, including the nature of a person and his or her essence, human subjectivity, human uniqueness, questions of the human self, intuition, trust, questions of love, and such existential questions as suffering, boredom, longing, experience, risk, old age, loneliness, and death or immortality, countered by joy, inspiration, passion, happiness, destiny, and other themes that define the marginal phenomena of social movement in the state of an emotional subject or passive object. Philosophical anthropology can analyze the essence of a human being, determining actions relative to the real givenness of the individual’s inner world of time and space. It is in this context that the study is considered relevant.

2

Methodology

Given the integrative, universal, and multidisciplinary nature of social work, the following principles are observed: determinism, social conditioning, social significance, humanism, justice, altruism, harmonization of personal, socio-natural, and sociocultural interests, continuity, consistency, and universality.

The main theoretical methods of scientific research include induction, deduction, axiomatics, analysis, and synthesis.

3

Results

Recently, the problem of the place of social work theory among the sciences has been the subject of ongoing debate. No matter what the sciences of social work are, the crucial condition is the combination of theory and practice in unity. Social work is inherently integral to the sciences. The professional work of a social worker, being unique and multidisciplinary, derives from the need for the individual, the family, the group, the community, and the society—in general, the combined knowledge of society. Thus, medicine, psychology, sociology, law, pedagogy, as well as other sciences that consider a person as an object of their research, can work from the perspective of its specificity. However, in such a process, the specific one-sidedness of the study cannot produce meaningful results. A comprehensive and complete scientific picture of society and its determinants is necessary to achieve the goal. Such a function in science is characteristic of humanistic philosophy. Along with the fact that the problematic nature of social work addresses all questions about human beings, it is an objective requirement to have a philosophical reflection to address them. Then, during social work, it is important to develop a philosophical conceptual apparatus, philosophical methodology, and the choice of valuable sociocultural traditions because, during social work, only humanistic philosophy gives the possibility of deep analysis of human existence, its universality and uniqueness, and social and spiritual essence. Humanistic philosophy is particularly characterized by the discovery of human’s existential essence. The philosophical and methodological assumptions at the foundation of social work are mostly formed within the framework of phenomenology and existentialist philosophy. Based on the normative and value system of the societal variety, human thinking experiences antithetical existential situations: suffering and passion, sorrow and joy, happiness and unhappiness, altruism and selfishness, etc. In the process of social work, such states find support in the pragmatic and rational aspects. Integrating the abstractness of the human phenomenon in a sociocultural context into a system of values is one of the pragmatic tasks of philosophy. In addition to reflecting important provisions of the real being of human ontology, the philosophy of social work is capable of integrating and regulating various problematic issues concerning the individual. In this case, the love for people, imbued with the ideas of humanism and respect,

Humanistic Philosophical Foundations of Social Work

represents the highest achievement and provision for the versatile and harmonious development of the individual socio-natural and sociocultural adapted conditions. The combination of natural beginnings and cultural growth is important in the harmonious development of a person. The problems of social work include such problems as homelessness, poverty, unemployment, working with homeless adolescents, runaways, helping people with disabilities and the elderly, protecting mothers and children, and providing social protection, arising from the framework of the ideas of humanism. An important phenomenon of the various problems of human existence is the concept of time. The concept of time is considered a complex theoretical result of the way of life picture of the world in the social evolution and structuring of the activities of the sociocultural process. Time is not only a phenomenon of cognition and a social phenomenon in the human subject, it lives as a marginal phenomenon of social movement in a state of the present emotional subject or passive object as suffering, boredom, longing, suppression, experience, and risk, or, on the contrary, joy, excitement, and passion. Thus, time is a form of individual being, which determines the actions relative to the real existence of the inner world of the individual. The concept of time in human existence is conditioned by the concept of space. Space is a form of existence of matter. It gives insight into the existence of things, phenomena, or processes at a particular time. Space and time are inseparable from matter. Based on a dialectical connection, their relationship has universal and general qualities. This philosophical pattern of extra-natural processes can become spiritual and social, integrating, and governing position for human life. Such a phenomenon is characteristic of humanistic philosophy. The conceptual framework of the philosophy of social work includes philosophical categories and forms of thinking of a universal nature. This includes the following: • Society—a person and society, culture and naturalness, social action and social relations, and freedom and conflict • Existence—death and immortality, happiness and unhappiness, love, passion and delight, youth and old age, development and retreat, sadness and joy, regret and joy, unfulfilled and success, longing and boredom, and inspiration and excitement • Object and subject—time and space, situation and state, choice and hopelessness, riskiness and marginality, way of life and life movement, communication, etc. The intersection of duality—universality and uniqueness—is central to the problems of philosophy of social work. These are inherently complex phenomena of human nature, consisting of genetic conditioning and sociocultural norms

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in the a priori and total forms of life’s catastrophes, life’s essence, social impassibility, and individual freedom. The philosophy of social work provides a direction for understanding the deep essence of the social environment and individual life in the daily lives of the social worker and the client within the existential framework of thinking with others and with oneself at the level of philosophical reflection. A person, finding themselves in physical, mental, and social situations, in a state of scarcity or deficit, creates the prerequisites for understanding their subject, deep and broad assimilation of the phenomena associated with subjectivity (Chizhov, 1998). Simultaneously, this helps assimilate the methodological issues of a particular society to avoid social harm and social problems, especially socio-economic upheavals, and get out of them. The human world creates a scientific picture of the world, a culture that changes according to the sociocultural process. The concept of social movement is considered a fundamental category of social work theory as an individual movement or social movement. Constituting suffering or philosophy of ideas about the vital world of society in crisis, the philosophy of social work can create philosophical provisions for their regulation. It can especially help in the philosophical interpretation of the subject of social work in considering the variety of human existence and its ethnic, regional, ancestral, age, historical, natural, mental, and individual characteristics combined with the universal framework. In this process, another matter is whether the tendency to generalize an individual or the notion of the same evaluation of all people will produce a positive or negative result. If efforts at social-legal equalization in the pursuit of happiness in the context of socialization are fit for purpose, the unique nature of each individual, and their unique independent qualities and values, this will lead to unrecognizable negative results, which is quite clear (Karabekov, 2012). The conceptual apparatus of the philosophy of social work is drawn from the following problems. This is the mutual unity of the provisions of socio-culture and socio-naturalism, rationality and irrationality; the typology of relations concerning the world and philosophical temporalism; uniqueness and universality; limitedness and infinity; responsibility and obligation; philosophy of suffering, reconciliation, agreement, salvation, and the essence of life with events and spiritual circumstances, etc. As a support in the full understanding and explanation of the theory and practice of social work and its sphere of activity, the academic language of classical philosophy can condition the accurate and clear transfer of thought and make the relationship between the subject and object of social work convenient. However, the stereotypical disputes of traditional issues in ancient, Western European classical philosophy (i.e., the irreconcilable struggle between materialism and

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idealism) cannot become the main problem of the philosophy of social work (Akmatov, 2001). As noted above, the main problem of the philosophy of social work is aimed at knowing the being of the social client and combining it with a humanistic philosophy. In this perspective, all valuable points of the philosophy of the peoples of the world, the philosophy of the West and the East, the philosophy of the rational and the irrational, and the philosophy of the existential and the phenomenal could be used for society. The main pressure of contemporary human philosophy is to cognize the immanence of a person, in other words, to move away from an understanding of the transcendence of a human. This direction helps to cognize the spiritual-social phenomena of a human. The social worker must distance himself or herself from understanding the transcendence of an individual, a social group, or a known subculture for the real-life need of the social client and find ways to regulate it (Heidegger, 1997). Humanistic philosophical anthropology gives particular prominence to the individual’s being and the essence of personal life. Usually, in Eastern culture, the life essence of the individual is complicated before the social imperative. Its happiness and destiny are integrated within the framework of social values. Its real subjective phenomenon in a personal context is not evaluated enough. Therefore, cognition of the individual in a personal phenomenon is characteristic of philosophical existentialism. “Personality is truly existential and autonomous; it is a conscious and free entity that cannot be reduced to abstract and general principles. Speaking of the concept of personality in some forms of consistent personalism, one thing should be emphasized: often, the human subject here still has a clearly delineated, strictly limited being, clearly distinguished from the being of other objects and from the background of the world” (Bruning, 1997, pp. 209–224). Additionally, it can be noted that the socialization of the individual and sociocultural paradigms that stimulate existential channels and implement universal principles are regulated through the provisions of humanistic philosophy. The subjectivity of the philosophy of social work is realized in accordance with the level of philosophical reflection of the subject performing social work. It depends on the degree of thinking, the characteristic feelings, and the mind of the social client. The reflection of the philosophy of social work can contribute to solving all global and regional problems related to society in the context of world civilization. Today’s philosophy is particular about the anthropologization of all knowledge. It seeks to reflect on the multifaceted positions of worldviews through the phenomenon of a human. Whatever the conditions of traditional philosophy, the study of anthropological foundations in it are characteristic of today’s philosophy because “the

O. S. Akmatov

anthropological turn in philosophy is expressed in the desire to address the problem of a human in all its multiplicity” (Gurevich, 1997, p. 5). For social work, whose object and purpose of the study is the human, philosophical anthropology, along with the position of general views, can create new heuristics in humanizing a human. Philosophy of social work, including the entire philosophical milieu, constitutes a dialogue of such phenomena as the phenomenon of a human, the multifacetedness and peculiarities of human existence, and, in general, the essence of human life. “At the very source of the idea of humanism are the requirements to provide the necessary, appropriate conditions for the love for the human being, the respectful attitude toward them, the consideration of them as the highest achievement and value, the all-round and harmonious development of the individual. In a person’s harmonious development, combining their natural origin and cultural development is of primary importance. The most fundamental issue here is the construction of human (in the sociophilosophical sense) and humanistic (in the ethical-aesthetic sense) life” (Akmatov, 2013, p. 31). Ensuring the realization of this idea of humanism in human life, in other words, the process of turning an idea into reality, must be valued as a professional responsibility of social work, seen as the face of civilized society.

4

Discussion

In accordance with the research objectives, the following results can be shown: • All global problems in the dialectical context of microand macrocosm require thinking at the level of constructive philosophical reflection on the socio-natural and sociocultural relations of the universe and a person, the biosocial and spiritual essence of a human • In philosophical anthropology, the place of humanistic philosophy in the formation and development of human beings is of paramount importance within the professional issues of social work • The philosophical methodology of the social work theory, aimed at humanizing the person, has an integrative and professionally-oriented mission in all areas of social work. Integrating all knowledge, today’s philosophy stands out in the direction of anthropologization. It seeks to make sense of the multifaceted provisions of the worldview through the phenomenon of a human • The study of the phenomenon of a human in an anthropogenic context is characteristic of philosophical anthropology. Philosophical anthropology shows the marginal phenomena of the social movement in a state of the real

Humanistic Philosophical Foundations of Social Work

emotional subject or passive object: human nature and content, human subjectivity, human uniqueness, questions of self, self and you, and self, you, and others, intuition, trust, love; existential questions: suffering, boredom, longing, experience, risk, old age, loneliness, and death and immortality, as contrasted with joy, love, inspiration, passion, happiness, destiny, etc. These problems are directly related to the professional problems of social work • Social issues outside the scope of social work include homelessness, poverty, unemployment, inappropriate behavior, work with adolescents, support for refugees, people with disabilities, the elderly, protection of mothers and children; in general, the formation and development of the human being and the scientific and pragmatic mission of humanistic philosophy • Philosophy of social work, including the entire field of philosophy, creates conditions for the convergence (continuum) of such issues as the phenomenon of a human, the multifacetedness of human existence, the peculiarities of human existence, and the entire essence of human life

5

Conclusion

The humanistic philosophical foundations of social work, along with the inclusion of all philosophical areas, constitute a dialogue on such issues as the phenomenon of a human, the multiplicity of human existence, its characteristics, and the meaning of human life. The philosophical methodology of the theory of social work on humanizing the individual is aimed at the humanistic integration of all aspects of social

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work, the sociocultural formation of the individual, and its harmonious development. In the harmonious development of a person, the combination of their natural origin and cultural development is of primary importance. In this case, the most fundamental issue is the formation of human life in the humanisticanthropological, ethical-aesthetic, and existential sense. Ensuring the realization of this idea of humanism and altruism in human life, in other words, the process of turning an idea into reality, must be valued as a professional and deontological responsibility of social work, seen as the face of civilized society.

References Akmatov, O. S. (2001). The ancient origins of humanistic ideas. In Proceedings of the ITC “Current problems of Kyrgyz Philosophy” dedicated to the 50th anniversary of OshSU and the 140th anniversary of K. Zhenizhok (pp. 84–87). Osh, Kyrgyzstan. Akmatov, O. S. (2013). The humanistic philosophy of Mollo Niaz. Bruning, W. (1997). The fundamental types of present philosophic anthropology. In V. M. Zhamiashvili (Ed.); A. V. Pertsev, A. A. Laptev, & M. A. Malyshev (Transl. from Kyrgyz), Western philosophy: The results of the millennium (pp. 209–224). Delovaya kniga, Odyssey. Chizhov, P. G. (1998). The problem of actualization of the humane attitude of man to nature. Dissertation of Candidate of Philosophy. I. K. Akhunbaev Kyrgyz State Medical Academy. Gurevich, P. S. (1997). Philosophical anthropology: Textbook. Vestnik. Heidegger, M. (1997). Being and time (V. V. Bibikin Transl. from German). AdMarginem (Original work published 1927). Karabekov, K. C. (Ed.). (2012). Improving the standard of living of the population of Kyrgyzstan. Shapovalov, V. F. (1998). Fundamentals of philosophy. From classics to modernity: Textbook. FAIR-PRESS.

Quantitative Tools for Corpus Analysis of the Semantics of “Sustainable” in Contemporary English Oxana V. Goncharova , Svetlana A. Khaleeva , Lola A. Kaufova , and Irina S. Stroeva

Abstract

The paper aims to differentiate the combinable characteristics of “sustainable” and to streamline the transformation of its semantic structure in contemporary English. The availability of large online corpora provided a straightforward tool for analysis. The first step of the present work was to identify the collocational patterns for the keyword “sustainable,” then the frequency of all collocational pairs was found over the entire corpus; the collocations that occurred more than 20 times were considered to be important and included in the analyses. The concordances generated from text corpora were sorted according to their place—one to the right and two to the right to find any key factors or semantic fields. The data set was analyzed via SPSS 24. The factors identified in the “one to the right” group include “Energy facilities and solutions,” “Business and production,” and “Social development.” The factors in the “two to the right” group include “Human and social services,” “Earth resources exploitation,” and “Manufacturing and production.” Keywords

Polysemantic words · Semantic increment · Corpus analysis · Quantitative tools · Sustainability

JEL Codes

C1 · Y8 · Z13

O. V. Goncharova · S. A. Khaleeva (✉) · L. A. Kaufova · I. S. Stroeva Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]

1

Introduction

It has been almost half a century since the problem of polysemantic verbal information comprehension has found its receptive audience among linguists from all over the world, for example, Bolinger (1967), Katz (1972), Keil and Batterman (1984), Klein and Murphy (2001), Klepousniotou (2002), Light and Carter-Sobell (1970), Swinney and Onifer (1981), Was (2011), and others. Though solid theoretical and experimental material has been accumulated, various kinds of polemics on this topic are still conducted in many contemporary research studies, including methodological ones (Ide & Véronis, 1998; Keil & Batterman, 1984; Kwong, 2013). As a rule, they concern issues related to the context influence on the meaning of polysemantic words, the dynamics of their perception, typological differentiation of lexical ambiguity, etc. Due to the fact that language is definitely a social phenomenon that does not exist apart from culture, special mechanisms of “adjunction of meanings” (Vinogradov, 1959, p. 228) are activated around the most popular topics and socio-political events of a particular period of society’s existence, gradually transforming their initial semantics. As a result, we can observe certain semantic increments—the creation of new meanings and connotations. Yu. Lotman noted that it is important to consider such a “creative” function of the meaning adjunction within texts because they are not “just passive packaging of a given semantics, but new meanings generators.” They are like plant seeds, which are information-generating mechanisms, and can be transferred to a new or even alien environment, preserving germination and “reconstructing the memory of the tree that produced them” (Lotman, 2002, pp. 189–190). We think that the phenomenon of “sustainability,” as one of the most discussed ideas in various socio-political and scientific spheres (Hajer & Versteeg, 2005; Hawkes, 2001), is particularly interesting. The concept of sustainable development appeared as a result of the search by the international community for measures that the governments could take to counter numerous

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_98

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aggravated global challenges, such as economic growth depletion due to extensive exploitation of raw materials, extensive increase in anthropogenic pressures on the environment, etc. The content of various constituent documents devoted to sustainable development is a sort of a compromise that states various interpretations of the term semantics. Though constantly changing sustainability goals include quite ambiguous and poorly formulated interpretations, they are nevertheless capable of reflecting certain worldviews. Since the term “sustainable” over the years of its existence in the contemporary English language has obtained a certain number of similar and sometimes completely new meanings that are to be properly understood only through their textual environment, it is necessary to analyze and put in order its possible semantic interpretations.

2

Methodology

The theoretical basis of the study is formed in the works of Glass and Holyoak (1975), Katz (1972), Keil and Batterman (1984), Perfetti and Goodman (1970), Rips et al. (1973), Smith et al. (1974). Keil and Batterman also suggest that word meanings can combine two types of representative features—descriptive and defining (Keil & Batterman, 1984). According to their point of view, the difference between them is that defining features are mandatory and correlate with the dictionary definitions, while descriptive ones are not mandatory and do not correlate with dictionary definitions. The researchers point out that the combination of defining features is an invariant set of characteristics that represent rule-based criteria of representation (Corpus of Contemporary American English, n.d.). Table 1 Results of factor analysis “one to the right”

Variable “one to the right” Growth Energy Communities Facilities Energy resources Model Rate Solutions Self-development Elements Buildings Way of living Production Path Society Design System Service Trend Real Advancing Long-term Environmentally

Thus, the purpose of this research is to find out what specific information each of the chosen nominative unit conveys. Our interest in the research of the linguistic environment of the described unit can be explained by the idea of the non-accidental nature of the compatibility of lexical units, which will allow us to describe conceptual characteristics of “sustainable” and detect both similarity areas and some differentiating features. To analyze the most frequent collocations with the studied adjective, we selected the following corpus search parameter: “sustainable” plus two collocations in the postposition. We have chosen collocates in the postposition to the target word due to the fact that “sustainable” as an attribute expresses specific properties inherent to the objects. Each object has a certain set of features that form its essence, and the adjective “sustainable” serves to explicate one of them. These features are merged with its carrier and form an inseparable unity with it.

3

Results

The data of this research is the node word “sustainable,” followed by some collocations found and formulated by the computer-based tool AntConc. First, we need to make a concordance of the keyword in context (KWIC) “sustainable” in the middle, and the AntConc shows what the surrounding text looks like. We arrange concordance lines by a sorting criterion—one to the right, then two to the right of the main word. This way, we can quickly see patterns in the lines (Corpus of Contemporary American English, n.d.; Costello & Osborne, 2005) (Tables 1 and 2). Factor 1 0.32826 0.64821 0.12056 0.84953 0.66822 0.17175 0.03037 0.15925 0.14688 0.33265 0.31876 0.50904 0.01138 0.12683 0.44322 0.30535 0.23125 0.62761 0.54421 0.21596 0.00053 0.46822 0.71436

Factor 2 0.63062 0.35087 0.01641 0.15297 0.06638 0.77385 0.65805 0.33072 0.21868 0.16357 0.76703 0.32749 0.57798 0.10036 0.24475 0.50716 0.69024 0.42061 0.35087 0.02641 0.18397 0.06433 0.05385

Source: Compiled by the authors based on Corpus of Contemporary American English (n.d.)

Factor 3 0.43877 0.08476 0.61832 0.35533 0.45313 0.41456 0.17071 0.65495 0.52819 0.08167 0.09856 0.50174 0.10363 0.52314 0.60361 0.49551 0.11381 0.16807 0.02876 0.21832 0.54033 0.54313 0.41456

Quantitative Tools for Corpus Analysis of the Semantics of “Sustainable”. . . Table 2 Results of factor analysis “one to the right” and “two to the right”

Variable “two to the right” Government Development Resources Factories Price Leader Places Program Earth Society Exploitation Movement Subsistence-farming Design Service Solution Humans Revolution Suppliers Spending Emerging Require Starting Protecting Take care Promising Looking Social More Ecological Urban

563 Factor 1 0.66812 0.18766 0.21532 0.05835 0.04313 0.61456 0.41224 0.65195 0.02819 0.58111 0.03255 0.05274 0.10363 0.22314 0.59766 0.48951 0.62381 0.34275 0.15982 0.14688 0.45267 0.31876 0.09449 0.11381 0.23868 0.44322 0.30535 0.63125 0.35125 0.30519 0.14688

Factor 2 0.46003 0.19246 0.67439 0.20706 0.14034 0.32801 0.47374 0.13851 0.74629 0.07839 0.60561 0.26124 0.59502 0.30871 0.42896 0.27601 0.18940 0.00914 0.00410 0.37803 0.08498 0.49448 0.25256 0.72610 0.12957 0.18455 0.04097 0.15599 0.04001 0.53012 0.61482

Factor 3 0.38001 0.68201 0.15222 0.57154 0.60473 0.06293 0.41014 0.04600 0.29317 0.19033 0.40222 0.40917 0.25349 0.36293 0.44774 0.31934 0.27869 0.15727 0.61402 0.35349 0.41903 0.34014 0.31924 0.16272 0.43391 0.16272 0.33915 0.44452 0.26245 0.29571 0.47682

Source: Compiled by the authors based on Corpus of Contemporary American English (n.d.)

The data set was analyzed via SPSS 24. The factors identified in the “one to the right” group include “Energy facilities and solutions,” “Business and production,” and “Social development.” During our research, the words around “sustainable” were identified by a sorting criterion, and then these data were grouped into categories to find any key factors or semantic fields. The factors in the “two to the right” group include “Human and social services,” “Earth resources exploitation,” and “Manufacturing and production.”

4

Conclusion

This study has identified several advantages of using corpora in linguistic research, such as definite convenience. We concluded that a model for polysemantic word meanings recognition should include the following points: presentation of a word used in one of its meanings—activation of a set of cognitive contexts associated with the word—identification

of the corresponding cognitive context (or its element)— identification of the corresponding meaning of a multivalued word.

References Bolinger, D. (1967). Adjectives in English: Attribution and predication. Lingua, 18, 1–34. https://doi.org/10.1016/0024-3841(67)90018-6 Corpus of Contemporary American English. (n.d.). Retrieved from https://www.english-corpora.org/coca/. Accessed 10 Feb 2022. Costello, A. B., & Osborne, J. W. (2005). Best practices in exploratory factor analysis: Four recommendations for getting the most from your analysis. Practical Assessment, Research, and Evaluation, 10(7), 1–9. https://doi.org/10.7275/jyj1-4868 Glass, A. L., & Holyoak, K. J. (1975). Alternative conceptions of semantic memory. Cognition, 3, 313–339. Hajer, M., & Versteeg, W. (2005). A decade of discourse analysis of environmental politics: Achievements, challenges, perspectives. Journal of Environmental Policy & Planning, 7(3), 175–184. https://doi.org/10.1080/15239080500339646 Hawkes, J. (2001). The fourth pillar of sustainability: Culture’s essential role in public planning. Cultural Development Network.

564 Retrieved from https://www.americansforthearts.org/sites/default/ files/HawkesJon%282001%29TheFourthPillarOfSustainability.pdf. Accessed 10 Feb 2022. Ide, N., & Véronis, J. (1998). Introduction to the special issue on word sense disambiguation: The state of the art. Computational Linguistics, 24(1), 1–40. Retrieved from https://aclanthology.org/J98-1001. pdf. Accessed 10 February 2022 Katz, J. J. (1972). Semantic theory. Harper and Row. Keil, F. C., & Batterman, N. A. (1984). Characteristic-to-defining shift in the development of word meaning. Journal of Verbal Learning and Verbal Behavior, 23, 221–236. Retrieved from https://citeseerx. ist.psu.edu/viewdoc/download?doi=10.1.1.329.4931&rep=rep1& type=pdf. Accessed 10 Feb 2022 Klein, D. E., & Murphy, G. L. (2001). The representation of polysemous words. Journal of Memory and Language, 45(2), 259–282. https:// doi.org/10.1006/jmla.2001.2779 Klepousniotou, E. (2002). The processing of lexical ambiguity: Homonymy and polysemy in the mental lexicon. Brain and Language, 81(1–3), 205–223. https://doi.org/10.1006/brln.2001.2518 Kwong, O. Y. (Ed.). (2013). New perspectives on computational and cognitive strategies for word sense disambiguation. Springer. Light, L. L., & Carter-Sobell, L. (1970). Effects of changed semantic context on recognition memory. Journal of Verbal Learning and

O. V. Goncharova et al. Verbal Behavior, 9(1), 1–11. https://doi.org/10.1016/S0022-5371 (70)80002-0 Lotman, Y. M. (2002). Articles on the semiotics of culture and art. Academic Project. Perfetti, C. A., & Goodman, D. (1970). Semantic constraint on the decoding of ambiguous words. Journal of Experimental Psychology, 86, 420–427. https://doi.org/10.1037/h0030181 Rips, L. J., Shoben, E. J., & Smith, E. E. (1973). Semantic distance and the verification of semantic relations. Journal of Verbal Learning and Verbal Behavior, 12(1), 1–20. https://doi.org/10.1016/S00225371(73)80056-8 Smith, E. E., Rips, L. J., & Shoben, E. J. (1974). Semantic memory and psychological semantics. Psychology of Learning and Motivation, 8, 1–45. https://doi.org/10.1016/S0079-7421(08)60451-X Swinney, D. A., & Onifer, W. (1981). Accessing lexical ambiguities during sentence comprehension: Effects of frequency of meaning and contextual bias. Memory & Cognition, 9(3), 225–236. https:// doi.org/10.3758/BF03196957 Vinogradov, V. V. (1959). About the language of fiction. Goslitizdat. Was, C. A. (2011). Inhibition of ambiguous word activation. In the context of a working memory task. International. Journal of Linguistics, 3(1), 1–20. https://doi.org/10.5296/ijl.v3i1.607

Social Partnership as a Mechanism for Coordinating the Goals and Values of Subjects of Social Interaction in Modern Russian Conditions Anzhela M. Salogub , Alexander S. Starovoitov Nina V. Demina , and Ivan K. Galan

, Marina V. Chistova

,

Abstract

Keywords

Purpose: The article analyzes relevant issues of sustainable development of modern organizations, comprehends the existing mechanisms of effective cooperation in Russia and the world. The authors presented a new model of social partnership in modern Russian conditions, which allows consolidating the goals and values of the main agents of interaction: government, business and science (education) based on the potential of public organizations and leaders of movements. Design/methodology/approach: General scientific methods of research of traditional and promising forms of cooperation are used to identify problems of cross-sectoral cooperation. The methods of symbolic and figurative modeling of scientific research are used in order to build an integral model of the functioning of the social partnership system. Findings: In the scientific material, the authors identified the main problems of cooperation, developed a mechanism for organizing effective partnership through the creation of an open system of social partnership between the state, the scientific community, business, as well as volunteer and public organizations. The trends towards the definition of global and Russian sustainable development goals, the achievement of which requires coordinated and consistent interaction of all subjects, are studied. Originality/value: Certain global sustainable development goals require the world community to define new mechanisms of internal and external partnership aimed at solving common “global problems”: climate change, poverty reduction, access to education and protection from violence, etc. The development of the country in a crisis and overcoming its negative consequences is possible provided that harmony is achieved between the goals and interests of all subjects of interaction.

Social partnership · Subjects · Values · Open innovation · Model · Sustainable development

A. M. Salogub · A. S. Starovoitov · M. V. Chistova (✉) · N. V. Demina · I. K. Galan Pyatigorsk State University, Pyatigorsk, Russia

JEL Codes

J20 · M12 · M14 · M50 · O40

1

Introduction

The dynamism of the development of modern society, current innovations and modernization of all spheres of society, including the development of industrial and information technologies, digitalization and globalization of social processes, have led to an acceleration of economic development and an increase in the scale of government and commercial projects. The radical and gradual changes in the conditions of interaction of economic entities at the macro and micro levels require participants in public relations to apply new methods and mechanisms for building a system of effective interaction, taking into account the need to achieve not only individual, but also public goals and interests. The issues of effective partnership in all spheres of public life were discussed by the world community within the framework of the 70th session of the United Nations General Assembly (UN). The agenda of the session adopted 17 sustainable development goals of the world community for the period up to 2030, aimed at eliminating poverty, preserving the planet’s resources, ensuring well-being and quality of life for all Homo sapiens living on the planet. To maximize the effectiveness of social processes, it is necessary to create a system of functioning of economic entities at all levels of socio-economic interaction based on mutual interests for the most effective achievement of social,

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_99

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economic and political goals of the state, business, science and education and modern society as a whole. In this context, “social partnership” is an effective mechanism for coordinating the goals and values of economic entities of socio-economic interaction both in the field of international and inter-sectoral interaction in modern Russian conditions.

2

Methodology

The system of social partnership has a low level of approbation in the conditions of modern Russia. In fact, partnership relations at the legal level are possible in the form of publicprivate partnership, established by the Federal Law “On Public-Private Partnership, Municipal-Private Partnership in the Russian Federation and Amendments to Certain Legislative Acts of the Russian Federation” dated 13.07.2015 No. 224-FZ. The normative legal act regulates the process of co-financing the expenditure obligations of the business within the framework of the target distribution of investments (Federal Law No. 224-FZ of July 13, 2015). Other existing mechanisms for financing and subsidizing investment and social projects are aimed at achieving specific goals and do not have systemic features. The existing model of “state-business” in the conditions of modern trends is not able to meet the growing needs of society (Gorbunov, 2021). In the context of a pandemic, the creation of a partnership system can increase the efficiency of socio-economic activities, and moreover, will minimize the critical level of “extinct enterprises”. According to Rosstat data, in 2021, more than 368,000 enterprises in all spheres of socioeconomic activity were closed in Russia (Federal State Statistics Service, 2022). Using the methods of symbolic and figurative modeling of scientific research (Shtoff, 1966), a model of the functioning of social partnership of subjects of social interaction in modern Russian conditions in order to achieve the goals of sustainable development will be presented.

3

Results

Governments around the world have made available important data sets that are key to solving many social problems. Climate change, poverty reduction, access to education and protection from violence are part of such tasks. The UN Sustainable Development Goals are a vivid example of the joint efforts of the participants involved in the interaction. National goals and targets for Russia’s breakthrough development are set by Decree of the President of the Russian Federation No. 474 of July 21, 2020. This decree defines as such goals for the period up to 2030: the

preservation of the population number, the health and wellbeing of people; opportunities for self-realization and the development of talents; a comfortable and safe environment for life; decent, productive work and successful entrepreneurship; digital transformation (Decree of the President of the Russian Federation No. 474 dated on July 21, 2020). Especially important is the recognition that the solution of many of the world’s great problems requires joint and coordinated efforts, in which the actions of governmental and non-governmental actors are equally significant: the state, business, the scientific community and civil society organizations (Van Tulder & Keen, 2018). The nature of modern social problems affects the interaction of various organizations. The solution of most socioeconomic problems is impossible only through the influence of the public sector. They also cannot be solved by other economic entities independently. The scale of such problems is often difficult to assess, and cause-and-effect relationships are complex (Sushaaс et al., 2019). An effective solution to global problems can be found if the mechanism of social partnership is introduced into the system of public relations. The development of the theoretical foundations of cooperation and partnership has been going on for four centuries and has been reflected in the works of famous philosophers and sociologists from all over the world, from the social contract theory by T. Hobbes to the theory of the “attenuation of the class struggle” by E. Bernstein. The developed mechanisms of effective cooperation made it possible to achieve qualitatively new principles of cooperation. Over time, disparate knowledge was synthesized by science from individual social disciplines. The theoretical and methodological foundations of this process were formed within the framework of many theoretical concepts and constructions. The study of various grounds and prerequisites for the emergence of ideas of cooperation as the primary basis of social partnership relations begins with the fundamental pillars of the “social contract”, the theoretical platforms of the social structure and the origins of people’s joint life activity. Social partnership is a system of coordinating the interests of subjects of social interaction. The proposed model of social partnership involves building a system of mutual coordination of various experiences, ideas, resources, interests, goals and values of state and public organizations, business and the scientific community (Fig. 1). A key element of the significant role of social partnership in achieving the interests of all economic entities is the definition and coordination of the goals and values of the partnership. The globalization of all social processes leads to the conclusion that all individual values of economic entities are synthesized and combined directly or indirectly within the framework of global values.

Social Partnership as a Mechanism for Coordinating the Goals and Values of Subjects. . .

Scientific community

State

- regulation of the legal space - provision of tax benefits - ensuring the interests of the state

Social partnership

Public and volunteer organizations

- ensuring the interests of the society - monitoring the interests of all participants in the partnership

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- introduction of open innovations - improvement of management systems - information security of partnership participants

Business efficient use of resources accelerated introduction of innovations ensuring sustainable socioeconomic development involvement of business in solving social problems

investment testing and implementation of innovations ensuring commercial interests

Fig. 1 The model of social partnership. Source: developed and compiled by the authors

The system of social partnership will allow to coordinate the values of each participant. State values include the socioeconomic development of the country, the growth of living standards and the welfare of citizens. Scientific community— development of scientific developments, public involvement in scientific activities, implementation and approbation of theoretical developments. Public organizations—consideration of public interests on the part of all participants and leaders of movements, involvement in commercial and scientific processes. Business—maximizing profits, loyalty from the state and public organizations, minimizing costs for access to innovative technologies and social experience. The alignment of the values of all participants in the social partnership forms common and individual goals for each party. A distinctive feature of the goals of social partnership participants is the absence of opposition and confrontation. Depending on the goals, the rights and obligations of the parties are determined, reflected in the key functions of the social partnership model: 1. The State provides: (a) Regulation of the legal space of the existence and functioning of social partnership: definition of the rights and obligations of all participants in the partnership (b) Creating a favorable tax climate for the existence of a partnership

(c) Regulation and supervision of compliance with legislative norms and achievement of the goals and values of sustainable development of the state 2. The scientific community provides: (a) Conducting research on new forms and mechanisms of effective management at the macro and micro levels and their implementation (b) Implementation of open innovation mechanisms to solve complex target problems (c) Information equality of all partnership participants 3. Business provides: (a) Testing of innovative management methods and mechanisms of open innovation (b) The required level of investment security for the implementation of projects within the framework of the partnership (c) Maximizing the efficiency of commercial organizations 4. Public and volunteer organizations provide: (a) Support in the implementation of open innovations to solve complex target problems (b) Determination of the social orientation of the activities carried out within the framework of the partnership (c) Monitoring compliance with the interests of all participants in the partnership, including the social and economic interests of society

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The scientific community is faced with the task of collecting relevant data in order to organize the necessary relationship between the participants and the problem being solved. One of the biggest problems of partnerships is that the goals of the partners “do not correspond to each other”. This means that one of the parties considers the partnership as a charitable activity, while the other side sees it as a source of competitive advantages and super-profits, for example, from the introduction of original author’s ideas (Partnership Resource Center (PrC), 2015). This creates a significant risk for the continuation of the partnership due to the limited compliance of organizational structures and different expectations between the participating social systems (Chistova et al., 2016). In a social partnership, data exchange should be carried out at all levels of interaction, provided that appropriate conditions are created for trusting and goal-oriented relationships. The same applies to the task of jointly developing more data points. Innovation potential is a powerful source of competitive advantage precisely because there are difficulties in creating and maintaining it (Salogub & Galan, 2020). The scientific community needs to provide other members of the partnership with innovative management mechanisms to make better use of existing resources. Research in the field of management of the twenty-first century has made significant progress. The scientific community will ensure minimization of the negative impact of the bureaucratic management system rooted in the state and non-state spheres. It is planned to use “open innovations” to solve global problems. “Open innovations” allow blurring the boundaries between the corporate world, the expert community, government institutions and civil society represented by public, volunteer, independent communities and movements. Unlike the classical approach, in which only experts have access to instruments, tools and data, the goal of open innovation is to invite everyone to participate in the work. This practice was previously applied by NASA when selected research and development tasks were publicly disclosed using special platforms for open innovation. 3000 residents of 80 countries responded to the call to participate in the project. As a result, the usual research and development cycle decreased by 6 times (Federal State Statistics Service, 2022). The state, within the framework of this system, forms a favorable tax and legal climate for sustainable socioeconomic development. In international practice, the initiator and promoter of the idea of social partnership is the International Labor Organization (ILO), founded in 1919. The ILO was established by the governments of the countries for cooperation in the field of harmony and elimination of social injustice. The greatest attention in the activities of the ILO is paid to improving working conditions. A distinctive feature of the ILO

A. M. Salogub et al.

interaction model has become the involvement of business, governments and trade unions in their work. The ILO’s activities also include consulting and technical assistance to countries in the development of labor and social policies. Currently, the ILO consists of more than 150 States. In Russia, given the peculiarities of the political structure and national mentality, the formation of a system of social partnership was limited. The adopted normative legal acts regulated two spheres of labor relations: “state-business” and “employers-employees”. The first step in solving the problems of social interaction was the Decree of the President of the Russian Federation of 1991 “On social partnership and the resolution of labor disputes (conflicts)”, further in 1992 the Russian Trilateral Commission (RTC) was established, and in 2001 the Labor Code, developed to strengthen the institutions of social partnership, came into force. However, the social partnership system of the Russian Federation does not fully perform the function of representation and coordination of group interests. It is necessary to consolidate the status and general provisions of social partnership in Russian legislation: the purpose, subject, concepts and principles of the legal space of partnership. The normative legal act should regulate the conclusion of a quadripartite agreement between the state, science (education), business and non-profit organizations. The definition of rights, duties and powers will become the guarantor of the fulfillment of their duties by the partnership participants and will form the foundation of a trust-based multifaceted cooperation. Business tax incentives encourage representatives of commercial organizations to participate in social partnership. With a high level of innovative business activity, it is possible to create a special economic zone and grant all partnership participants the status of residents of special economic zones. The quality of life and well-being of society will directly depend on the success and pace of business development. Public and volunteer organizations, when concluding a social partnership agreement, will identify relevant and priority social and economic problems for Russia. As part of the further functioning of the system, public organizations will ensure control over the observance of the interests of society, the achievement of tasks and the coordination of actions of all participants in the partnership with the original goals. Non-profit organizations will help to attract the public to the practice of “open innovation”. For the effective functioning of the social partnership system and the involvement of the public in developments, it is necessary to create public confidence in the new system. The globalization of social relations within the framework of continuous technological progress forces commercial, social and political structures to adapt and gradually transform the model of social interaction to a system of open

Social Partnership as a Mechanism for Coordinating the Goals and Values of Subjects. . .

social partnership. At the same time, there is an increase in the level of public influence on social ties. For example, the British media brand “The Guardian”. The newspaper actively supported the idea of absolute transparency, publishing information comprising state secret, and was severely criticized for this by various governments and even some other media. In addition, it takes the same approach to its own problems (especially those related to the drop in earnings from advertising) and encourages subscribers to help the publication by becoming “club members” and making monthly donations. In 2017, the newspaper stated that it already had 230,000 such club members, which exceeded the number of subscribers of the publication. Today, “The Guardian” receives nearly as much money from readers and club members as it does from advertisers. “The Guardian” demonstrates an example of collegial creativity and service production. The introduction of innovative technologies and the mechanism of “open innovations” implemented by public organizations and the scientific community will allow businesses to increase the efficiency of any type of economic and social activity with minimal costs. Taking into account the Russian trends towards the closure of small and medium-sized businesses due to the inability to function in a pandemic, social partnership will create a stable system capable of responding promptly to changing conditions of the geopolitical and economic situation both within Russia and on the world stage. Modern mechanisms of social partnership make it possible to turn the goals of sustainable development into national guidelines in choosing strategic priorities, consolidating resources for significant areas of development, establishing compliance with the trajectory of national development taking into account global trends. Countries cannot develop outside the global context, agents of social interaction become co-decision-makers in both national (regional) and global problems only through multipartnership. The state will improve legislation taking into account the real needs of business, science (education) and society as a whole. The scientific community will test and be able to adapt theoretical developments and research to practical activities. Public and volunteer organizations will enter the system of socio-economic relations as an independent element of control of socio-economic orientation carried out by the state, the scientific community and business. The business will receive full legal, social and economic support from the state and the public, as well as innovative support aimed at both improving the management system and introducing innovations.

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Conclusion

The globalization of public relations, the pandemic, the crisis, the reduction in the number of small and medium-sized businesses, the definition of “global” problems and sustainable development goals, all these factors have led to the need to create a new partnership mechanism at a fundamentally new level. Modern conditions require not only the creation of a mechanism for cooperation within the framework of targeted projects, but a single ecosystem—a “social partnership”. The system of social partnership is analogous to a living organism, where each element performs its functions and ensures the functioning of the system as a whole. The social partnership model includes four key elements: the state, the scientific community, business, public and volunteer organizations. For the effective functioning of the system, each element must correspond to its status and perform the functions and duties assigned to it. The state should develop a regulatory legal act on social partnership. Russia is a state governed by the rule of law, according to which social partnership must comply with a unified system of government and possess the features of legitimacy and legality. The state needs to involve the rest of the elements in the system of social partnership, to create favorable, trusting and beneficial conditions for cooperation. Each participant should be given rights and responsibilities depending on the assigned role, goals and interests. Moreover, the process of developing a regulatory legal act is impossible without the involvement of representatives of all economic entities. The scientific community acts as an element of maximizing the effectiveness of the system. Research centers and higher education institutions should create an innovative climate in the ecosystem. It is necessary not only to conduct research on new forms and mechanisms of effective internal and external management and the introduction of innovations of economic entities, but also to ensure information equality of all partnership participants, accessibility and openness of data. Public and volunteer organizations, due to their social orientation, will become, on the one hand, a reflection of public interests, on the other, a driving force for the globalization of innovative research. The dissemination and popularization of “global”, strategic and tactical problems will create a space for different types of solutions. Non-profit organizations will ensure the control of the socio-economic orientation of all decisions taken in order to avoid the predominance of the interests of individual elements of the system.

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The most difficult task will be to attract business. Businesses risk their investments and business reputation. Business interest in the social sphere of activity is often limited by commercial benefits. Within the framework of social partnership, the primary interests of business will be: obtaining the results of intellectual work of the scientific community (innovations), tax benefits, new legislative norms (removal of a number of restrictions within the partnership). During the functioning of the social partnership, the goals and values of all participants will come to a single indicator— the achievement of sustainable development of the state and society as a whole. Social partnership will create a stable system capable of responding promptly to the changing conditions of the geopolitical and economic situation both within Russia and on the world stage, which will lead to maximizing the efficiency of the resources used, economic entities will move from confrontation to a single socio-economically oriented policy.

References Chistova, M. V., Eremina, O. S., & Demina, N. V. (2016). Publicprivate partnership implementation in preschool education: experience of the regions of the Russian Federation. Bulletin of the Adygea State University. Series 5: Economics, 4(190), 185–194.

A. M. Salogub et al. Decree of the president of the Russian Federation No. 474 dated on July 21, 2020 “On National Development Goals of the Russian Federation for the Period up to 2030”. Legal reference system “ConsultantPlus”. http://www.consultant.ru/law/hotdocs/63714. html/. Data accessed 27 Feb 2022. Federal Law No. 224-FZ of July 13, 2015, “On public-private partnership, municipal-private partnership in the Russian Federation and amendments to certain legislative acts of the Russian Federation” (with amendments and additions). Legal reference system “ConsultantPlus”. http://www.consultant.ru/document/cons_doc_ LAW_182660/. Data accessed 27 Feb 2022. Federal State Statistics Service. (2022). https://rosstat.gov.ru/sdg. Data accessed 27 Feb 2022. Gorbunov, A. P. (2021). A conversation about the future: what type of society and state we need to achieve real effectiveness, efficiency and justice, In the collection: University Readings—2021. Materials of scientific and methodological readings of PSU (pp. 6–27). Partnership Resource Center (PrC). (2015). Report on the status of partnership. Erasmus University. 84. Salogub, A. M., & Galan, I. K. (2020). Management format in fastgrowing foreign it-companies. Medicine. Sociology. Philosophy. Applied Research, 3, 98–103. Shtoff, V. A. (1966). Modeling and philosophy. Nauka. Sushaaс, I., Grönlund, А., & Tulder, V. (2019). Data-driven social partnership: Exploring a new trend in the search for research tasks and issues. Government Information Quarterly, 36, 112–128. Van Tulder, R., & Keen, N. (2018). Capturing collaborative complexities—Designing complexity sensitive theories of change for transformational partnerships. Journal of Business Ethics, 315–332.

Cognitive Approach to the Analysis of Pregnant Women’s Identity Irina A. Kolinichenko , Arsen G. Avsharov B. Voronkina , and Maria V. Voloshina

Abstract

The research subject is the identity of pregnant women. The research aims to study the identity of pregnant women from the standpoint of cognitive psychology. The originality of the research lies in the integration of noospheric knowledge in psychology with ego-identity in the continuation of cognitive studies of personality. A significant number of women tested with different types of attitudes towards pregnancy are characterized by an ambivalent experience about their condition. The values of the indicators of characteristics depend on the type of their attitude towards pregnancy. However, there are no special differences between the groups of subjects with optimal and non-optimal attitudes towards pregnancy. Unchangeable identity categories are negatively associated with anxious attitudes towards pregnancy and the moral characteristics of women and correlate with identity categories (indicators 16–19). Regardless of the type of these relationships, a plurality of correlations in questions of identity and morality among the subjects is stated, which shows their significance. Such an analysis of attitudes towards oneself and others indicates the acceptance of the image of the “I” and identity with pregnant subjects. Keywords

Cognitive psychology · Identity categories · Moral judgments · Pregnant women

JEL Codes

I2 · I21 · I23 I. A. Kolinichenko (✉) · A. G. Avsharov · S. A. Nikulina · L. B. Voronkina · M. V. Voloshina Pyatigorsk State University, Pyatigorsk, Russia

1

, Svetlana A. Nikulina , Lubov

Introduction

Identity as a person’s attitude to the self-image has repeatedly become the subject of recent research, including in cognitive psychology. Antonova’s work directly refers to the study of this category in psychoanalysis, cognitive psychology, and interactionism. However, there is currently no unified theory that combines the knowledge of cognitive psychology with the problems of identity, the moral development of the individual, and the noospheric approach in psychology (Antonova, 1996). We will try to fill this gap and present the theoretical and methodological substantiation of the study in the interpretation (integration) of these scientific areas of psychology. It is necessary to note that the integration of psychological and ecological approaches is congruent to the individual’s conscious attitude to the problems of civilization, the development of the noosphere of psychic reality, and the sphere of the individual’s mind in a changing picture of the world. The noosphere is not a frozen reality. It is transformed by a person’s ability to think and overcome problems through conscious activity. A new direction of scientific knowledge—the psychology of the noosphere—has made it possible to designate the ideas of personality development in a different way in modern research. Ecological and psychological studies are united by the understanding of the human mind as the bearer of the psyche with its systemic attitude to the environment and natural conformity. A reasonable, understanding person needs to be conscious of their identity and strive for congruence in accordance with the principles of the noosphere. Possessing spirituality and consciously supporting the culturally and historically determined principles of morality that determine the spiritual development of the nation and the world is a fundamental requirement of modernity (Voskovskaya & Kulikov, 2014), without which the sphere of reason will become a rather pragmatic area of life of subjects. Even L. Kohlberg

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_100

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empirically proved that the development of human morality proceeds as an ascending, as well as downstream (Kohlberg & Power, 1981). Simultaneously, the sustainable development of humankind remains a problematic area of research. However, the development of the noosphere as a sphere of the mind is quite promising and inspires hope for an optimistic outcome, which is confirmed by a large amount of data obtained in recent studies, which are reviewed in this work. Ecological and psychological studies are united by the understanding of a person as a carrier of the psyche with his or her systemic attitude to the environment and natural conformity. The ecopsychological approach explores the problems of the development of the human psyche as one of the forms of being in nature (Subetto & Semikin, 2020, p. 41). As explained in various sources of scientific knowledge, the noosphere is the sphere of the mind, the space of intelligent life. In the concept of V. I. Vernadsky, the noosphere is interpreted as the development of humankind directed by the mind (Kohlberg & Power, 1981). According to I. N. Shvaneva, the noosphere is a new geological planet changed thanks to the scientific approach of people (Shvaneva, 2011). I. V. Chernikova correlates knowledge about the noosphere with the stages of its development; the source of each of the components of noospherogenesis is, among other things, information and ecology (Chernikova, 2005; Kuznetsov et al., 2000). One of the acute problems of our time is that the violation of the ecological balance is becoming irreversible, negatively affecting human health and their mental state. Therefore, contemporary scientific research is carried out to make a real contribution not so much to protection but to the preservation of the global space for the existence of life on Earth, the coexistence of humans and their surrounding nature, and their co-development and co-evolution (Moiseev, 2001). In contemporary concepts, identity is considered as the result of a conscious choice of a person (Erickson, 1996), which, due to openness to experience, is subject to variability. Identity problems lead to a personal crisis, the way out of which is the formation of a new human identity. As a result of a personality identity crisis, the subject chooses behaviors that would be unlikely under normal, non-crisis conditions (Kolinichenko et al., 2018, 2021; Ulybina & Kolotaev, 2016). Increasing attention to the personal identity of subjects, dissatisfaction with the existing identity prompts change and transformation of these qualities, which is a source of readiness for the development of morality and spirituality, which, according to Vernadsky (1991), is an integral part of the noosphere (Politkina, 2017).

I. A. Kolinichenko et al.

There is increasing attention to studies related to the noospheric approach, some of which directly or indirectly relate to the problems of identity and morality of the individual. In the article by A. I. Subetto and V. V. Semikin, an attempt was made to consider the individual’s identity from the standpoint of the noospheric approach (Subetto & Semikin, 2020). V. I. Vernadsky associates the idea of the noosphere with the moral character of people, the moral principle of civilization (Vernadsky, 1991). The formation of the noosphere is understood as a natural and, at the same time, cultural process associated with the manifestation of the personal principle at the level of the individual and society as a whole. Following the principles of humanistic psychology, I. V. Chernikova describes the picture of the world of modernity, noospheric psychology as part of environmental psychology as a spiritual component of human development (Chernikova, 2005). Moreover, environmentalism denotes a scientific movement that unites human self-consciousness and an ecological attitude to being, the formation of noospheric knowledge. In the noosphere, as scientists point out, the ideal principle of personality acts as a powerful means of transforming reality, acquires relative independence in a person, and becomes an active principle of life. People transform nature and create a culture reflected through art, religion, and moral principles. In the system of culture, a wealth of intangible values is formed, which a person appropriates in ontogenesis (Panov, 2007). The humanistic orientation of the idea of A. I. Subetto can be traced in the implementation by an individual or group of external-objective or internal-objective activity in a system that generates meanings (Subetto & Semikin, 2020). Each component of the system “man-nature” acts as a source and means of change, development of another, a phenomenon of the development of individuality, and the subject’s mental states. Scientific ideas about ecological systems became one of the sources in the analysis of changes in attitudes toward motherhood in the work of E. I. Zakharova, which we attribute to the research of the humanistic direction of psychology (Bronfenbrenner & Morris, 1998). Studying the causes of negativism in relation to the role of the mother, manifested in the personal sphere of today’s women, Zakharova (2015) turned to the scientific work of W. Bronfenbrenner and outlined the trends in the risks of a positive attitude of women towards their motherhood (Bronfenbrenner & Morris, 1998). By analogy with the level system of ecology by W. Bronfenbrenner (Bronfenbrenner & Morris, 1998), E. I.

Cognitive Approach to the Analysis of Pregnant Women’s Identity

Zakharova identified the levels of women’s attitudes towards motherhood (Zakharova, 2015). At the macro level of the system, a person’s sense of selfworth with its individual focus on the meso-humanistic focus of family education is stated, leading to the infantilism of women who distance themselves from the maternal function. The next level with increased social activity is characterized by the emergence of competing values. The last level leads to an increase in claims in standards of women’s lives. Scientists agree that identity is a personal, dynamic formation, thanks to which a person develops an idea of the Selfimage, which develops in accordance with its resources and social needs (Kolinichenko et al., 2022). Assuming that the low importance of the maternal role can be considered a complex social phenomenon (i.e., a consequence of social trends—society’s preference for socially active women, the humanistic orientation of the attitude towards the child in the family), Zakharova (2015) admits that a high proportion of the probability of causes may also be in the personal area. In particular, a negative attitude towards motherhood can be formed as a result of such orientations of the value sphere of women as a high assessment of self-image and self-realization in the profession. Together, forming a hedonistic orientation of the individual is a serious competition for the traditional value of motherhood associated with ensuring the child’s well-being. Therefore, rehabilitation of the value of motherhood requires comprehensive support, which consists in studying the phenomenon of avoiding maternal duties by women, the internal predisposition to accept the position of a parent and emotional involvement in the life of a child. It is the pregnant woman who acts as the cumulative subject of the “mother-child” human development system with the environment in which the human mental processes develop. An example of the noosphere will be the dyad “humanity-planet” as a special case of the system, the relationship between people and the environment. The environment surrounding a person acts as a kind of environment for the development or acquisition of individuality, which is not reduced only to the individual properties of a person or to external, environmental objects and socio-cultural conditions (Zakharova, 2015). Morality and spirituality are also considered in cognitive psychology. The cognitive orientation of research allows us to consider a person’s moral development in a different light. The studies by L. Kohlberg (Kohlberg & Power, 1981) found not only progress was found in the development of judgments about morality but also regression. Therefore, it cannot be argued that the development of morality has only a progressive character. One can argue with I. V. Chernikova that the contemporary picture of the world is a product of humankind’s creative, spiritual development, a universal idea of the world (Chernikova, 2005).

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According to K. Tworek and A. Cimpia, cognitive mechanisms detect a coincidence used to reason about physical modality, for example, what is physically possible or not, and what is necessary for moral modality about what is permissible from the standpoint of moral requirements or what is mandatory, and what is not (Tworek & Cimpia, 2016). It has been noticed that judgments from different areas if they run parallel to each other, can have a mutual influence (Tworek & Cimpia, 2016, p. 1111). Scientists formulate conclusions about these connections and potential mechanisms of this phenomenon; according to scientists, people can attribute specific properties to objects, expecting that they will not change. According to scientists, the explanatory bias they analyze serves as an independent source of socio-moral value and shapes how appropriateness and correctness are generally understood. Analyzing the scientific search for the moral choice of upcoming actions, one cannot ignore the work of K. Gilligan, who studied the assessment of their actions by women in the process of choosing decisions to save the life of their unborn child. According to the work “In a Different Voice: The Self-image and the morality of women,” making an altruistic decision in favor of a child’s life, despite the circumstances, is more characteristic of female moral psychology than male—the latter would prefer the most rational decision in a given situation, which would be selfish but time effective. The sphere of the mind of women is special; it is subject to variability, but the voice of compassion remains (Gilligan, 1977). The subject of study in synergetics is self-organization in the cognitive sphere; if the new picture of the world is systemic, then the new paradigm of theoretical knowledge, according to O. L. Kuznetsov, is the evolutionary-synergetic approach (Kuznetsov et al., 2000). Hence, the noospheric approach of Vernadsky (1991) allows forming a picture of the world that is qualitatively different from the old ideas, in which “a person is considered ... as an integral informationenergy-biological system from the standpoint of synergistic aspects and self-organization” (Shvaneva, 2011). This approach is also applicable to the consideration of the human cognitive sphere because its ideas extend to the field of the evolution of nature and society (socio-synergy).

2

Materials and Methods

The research was conducted in 2021 on the basis of the antenatal clinic in Pyatigorsk, the Stavropol Territory. The study involved more than 100 pregnant women of different ages. In the course of the study, the authors used observation, questioning, and testing for the research procedure:

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• An approved psycho-diagnostic technique—the questionnaire of M. Kuhn-Markpatland “Who am I?” (modified by Prof. E. V. Ulybina) (Ulybina, 2012) • The questionnaire “Judgments about morality” (Kolinichenko et al., 2018, 2021) • The method of M. Rokeach “Value Orientations” (Fetiskin et al., 2002) To solve the research problems, the authors applied a set of methods, including theoretical analysis, empirical study of identity categories, and methods of mathematical and statistical data processing (correlation analysis). The research included the study of categories of general, unchanging categories of identity, categories of personal and membership categories of identity, and judgments about morality and value orientations of pregnant women. After questioning and processing the individual protocols of the subjects, the authors entered the data into a general table; statistical mean values were calculated using Microsoft Excel 2020 and SPSS 11 software packages.

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Results

The research results are statistically significant and allow us to evaluate the manifestation of various indicators of immutable, personal, and group identity and personality traits integrated into the self-image of pregnant women and significant in the “mother-child” system. Processing of the data obtained during the psychological examination of the characteristics of women showed that the “optimal” type of psychological component of the gestational dominant for pregnancy was identified in eight women out of all subjects, which is 6% of the entire sample. Other types of attitudes towards pregnancy (hypogestognostic, anxious, euphoric, and depressive) are also not presented in a “pure” form. Thus, in almost all subjects, some choices indicate the absence of a dominant type of attitude towards pregnancy. Most women are characterized by ambivalent feelings towards themselves as pregnant women, the dyad “mother and child,” as well as the attitude toward how the surrounding people perceive their pregnancy. It should be noted that 93% of women have a combination of different types of relationships. Perhaps, this is due to the external conditions of contemporary realities in which women’s pregnancy occurs. They are living through a crisis associated with their special condition in the context of a pandemic in recent years. To analyze the differences in the characteristics of women from the selected groups, we conducted Spearman’s correlation analysis. Let us dwell in more detail on those correlations, the values of the characteristics of which depend on the attitude

of the subjects to pregnancy. In the first group of subjects, the optimal attitude towards pregnancy is directly proportional to the characteristics of the moral consciousness of the individual (moral dilemmas 6 and 8) and the second value from the “B” list. An inverse relationship is noted with hypogestognostic attitudes toward pregnancy, a moral dilemma about deviating from moral norms, and personal desirability categories of identity. In this group, hypogestognostic choices were inversely proportional to optimal and euphoric and the seventeenth value in the “A” list. Directly proportional connections of this indicator are noted with a moral dilemma about God’s given moral standards, personal categories of identity, and personal categories of identity by desirability. The lower the women’s anxiety, the higher the values of the following indicators • Moral dilemmas about the behavior of the majority, depending on the norms of morality • Laws that form the basis of morality • Morality based on compassion for others Indicators of personality categories are inversely related to the euphoric attitude to pregnancy, the next-to-last and last in order of priority values from the “A” list of M. Rokeach’s methodology. A directly proportional connection was found in the euphoric attitude with indicators (moral dilemma 1 and 4.7) of the first value in the order of priority from the list “A” and the third value in the order of priority from the list “B.” In the group of women who had difficulty in accepting their pregnancy or its individual manifestations, optimal choices were negatively correlated with hypogestognostic attitudes towards pregnancy (moral dilemma 3, 6, personal desirability categories of identity). A positive correlation was observed with moral dilemmas 1, 4, 5, 6, and 8 and the second value from the list “B.” Hypogestognostic choices are negatively associated with the optimal and euphoric attitude towards pregnancy by the indicator—moral dilemma 3 and the seventeenth value from M. Rokeach’s (Dobryakov, 2010) “A” list. Correlation links of indicators of women’s anxiety coincide with the revealed links of the first group of women. As differences between the structures of the diagnosed personality characteristics of the two groups, one can note a greater saturation of correlations in the group of women who have a less pronounced ambivalent attitude towards pregnancy and accept it to a greater extent. They tend to have more relationships between indicators of the moral qualities of a person; there is a correlation between moral characteristics and value orientations. For example, the indicator “the moral dilemma about focusing on the moral norms of the past” is inversely related to value orientations, which occupy the last place in the ranking of values (indicators

Cognitive Approach to the Analysis of Pregnant Women’s Identity

32–34) and is directly proportional to those values that come first in the list (indicators 23, 24, and 26). It is revealed that unchangeable categories of identity (indicators 15) are inversely related to anxious attitudes towards pregnancy and moral characteristics of women and their value orientations (indicators 4.6, 9, and 12) and are directly proportional to individual indicators of women’s moral properties (indicators 15, 7, and 8), categories of identity (indicators 16–19), and value orientations (indicators 21 and 28).

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Conclusion

This research contributes to the implementation of Sustainable Development Goals because problem-solving requires an integrated approach of cognitive psychology and psychology of the noosphere and ecology; otherwise, the idea of forming goals for optimizing human life by considering scientific research of individual sciences will be fragmented and uneven. The dominant type of attitude towards pregnancy is absent in most of the subjects. They are mainly characterized by the ambivalence of feelings in relation to the self-image of a pregnant woman, the “mother-child” duad, and the perception of their own pregnancy by others. The vast majority of women have a combination of different types of relationships, including hypogestognosic, anxious, euphoric, and depressive. Only 6% of cases revealed the optimal type of psychological component of the gestational dominant for pregnancy. Correlation links, the value of indicators of which reveal the attitude towards pregnancy, are directly related to moral consciousness and, conversely, to hypogestognostic attitudes towards pregnancy, dilemma 8, and personality categories of identity in terms of desirability. As attitudes towards morality 1, 4, and 7 strengthen, anxiety in pregnant women decreases. In the group of subjects with difficulty in accepting themselves as pregnant, optimal choices correlated negatively with hypogestognostic attitudes, dilemmas 3 and 6, and personality categories of identity in terms of desirability, and positively correlated with dilemmas 1, 4, 5, 6, and 8. Thus, we can say that there are no special differences in the relationships between the diagnosed characteristics of women with different attitudes towards pregnancy. More significant is the fact that a significant number of women have ambivalent feelings about their pregnancy. For both groups of women, moral issues are important during pregnancy. Dilemmas are directly related to topics that attract special attention of women during pregnancy and are rethought by them: life and death, questions of trust and lies, and relationships between loved ones.

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More correlations in the group of women accepting their pregnancy; the ambivalence of attitudes towards pregnancy is expressed the least. Unchangeable identity categories are negatively associated with anxious attitudes towards pregnancy and the moral characteristics of women, and correlate with identity categories (indicators 16–19). Considering the attitude to morality and personal identity, we have shown that the sphere of a person’s mind is interconnected with spirituality, culture, and moral character. A person influences the process of transition of the biosphere to a new evolutionary state. Even though the identity crisis of today’s person is stated, associated with the loss of social values of identification and attitude to morality, spirituality forms a person as a person and helps realize one’s values and moral beliefs, which subsequently become part of a person’s self-image.

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576 dedicated to the 50th Anniversary of Psychology Institute of Russian Academy of Science. (pp. 431–433) Moscow, 2022. Kuznetsov, O. L., Kuznetsov, P. G., & Bolshakov, B. E. (2000). The nature-society-man system: Sustainable development. State Scientific Center of the Russian Federation VNIIgeosystems; International University of Nature, Society and Man “Dubna”. Moiseev, N. N. (2001). The universe. information. society. Sustainable world. Panov, V. I. (2007). Is the psychic nature of the noosphere possible? Bulletin of the International Academy of Sciences, 2, 39–44. Politkina, K. I. (2017). Ecology: A textbook (2nd ed.). PGLU. Shvaneva, I. N. (2011). Noospheric psychology and its methods. Retrieved from https://www.socionauki.ru/almanac/noo21v/num ber_2/3_4_3.pdf. Accessed 10 Dec 2021. Subetto, A. I., & Semikin, V. V. (2020). Noospheric psychology: Prerequisites and foundations of formation in the XXI century. Asterion. Retrieved from http://www.trinitas.ru/rus/doc/0001/005d/ 2524-ss.pdf. Accessed 10 Dec 2021 Tworek, C. M., & Cimpia, A. (2016). Why do people tend to infer “ought” from “is”? The role of biases in explanation. Psychological

I. A. Kolinichenko et al. S c i e n c e , 2 7 ( 8 ) , 1 1 0 9 – 1 1 2 2 . h t t p s : / / d o i . o r g / 1 0 .1 1 7 7 / 0956797616650875 Ulybina, E. V. (2012). Constancy as a distinguishing feature of football fans identity. Psychological Studies, 5(23). https://doi.org/10.54359/ ps.v5i23.779 Ulybina, E. V., & Kolotaev, V. A. (2016). Identity crises in a situation of uncertainty as variants of self-attitude. The World of Psychology, 3(87), 121–132. Vernadsky, V. I. (1991). Scientific thought as a planetary phenomenon. Nauka. Voskovskaya, L. V., & Kulikov, D. K. (2014). Cognitive functions of dilemma in light of artificial intelligence problems. Engineering Bulletin of the Don, 4-2(32), 18. Retrieved from http://ivdon.ru/ uploads/article/pdf/11_voskovskaya_kulikov.pdf_c17b4a3447.pdf. Accessed 10 Dec 2021 Zakharova, E. I. (2015). Negative attitude towards motherhood in modern women: Settings and conditions. Cultural-Historical Psychology, 11(1), 44–49. Retrieved from https://psyjournals.ru/files/75465/ kip_1_2015_zaharova.pdf. Accessed 17 Dec 2020

Diasporic Factor of Sustainable Development of the Middle East States (the Case of Jordan) Alihan M. Israilov

and Denis A. Mirgorod

Abstract

JEL Codes

Purpose: The purpose of this article is to identify the features of the diaspora policy of states as a factor of sustainable development of Middle Eastern States, using the example of Jordan. Methodology: To achieve this goal, the authors used a group of theoretical approaches related to the problem of sustainable development, combined with theories of the diaspora policy of states. In addition, a combination of various methods was used in this work, which allowed us to form an understanding of the potential of diasporas in ensuring the stability of certain states. Findings: The main results of the article include the identification of the fact that diasporas can simultaneously act as a constraining and stabilizing factor for the sustainable development of states with a complex ethnic structure located in regions with high conflict potential. Originality: Using the example of the Hashemite Kingdom of Jordan, it has been established that states with complex ethnic composition may face a situation where the non-indigenous population makes up the ethnic majority and forms a large diaspora with their own vision of the socio-political development of the country. In such a situation, States such as Jordan pursue an appropriate diaspora policy, which may consist in actively involving other smaller diasporas in the political process to ensure their sustainable and progressive development.

J15 · J11 · Q01

Keywords

Middle East · Sustainable development · Migration · Diaspora · Diaspora policy · Chechen diaspora

A. M. Israilov (✉) Pyatigorsk State University, Pyatigorsk, Russia

1

Introduction

One of the central issues of global sustainable development is the problems of migration and refugees. Many countries and regions of the world are forced to solve the problems of displacement of large groups of migrants and refugees. Thus, the modern Middle East is a political map of ethnically fragmented states. The signing of historical documents establishing the borders of the Middle East region, the subsequent postcolonial period, as well as a series of ethnoconfessional and territorial disputes in the Middle East, formed many countries in the region with a complex ethnic structure. This is directly related to migration and refugees, and also significantly affects the course of both the regionwide and national political process (Berdine, 2018). The latter, in turn, is also connected with the problem of sustainable development of Middle Eastern States. One of the most notable countries in the region in this context is the modern Hashemite Kingdom of Jordan, which has a special ethnic composition, where the majority of the population is not ethnic Jordanians. This, in turn, creates certain risks of a socio-political and economic nature for the sustainable development of the state. In this regard, the leadership of the kingdom is forced to constantly search for the most effective diaspora policy that could guarantee the preservation of the current Jordanian elites of power and the current state-forming principles. Thus, the Jordanian model of diaspora policy can be considered within the framework of the problem field of sustainable development of states, especially in regions with an increased level of conflict potential, which, of course, should include the Middle East.

D. A. Mirgorod Pyatigorsk, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_101

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2

A. M. Israilov and D. A. Mirgorod

Methodology

In order to form the required methodological basis of this work, the authors were guided by classical theories in the field of sustainable development research, which were actively developed by such authors as Lélé (1991), Mebratu (1998), Zhang (2019). Also, the specifics of this article required the involvement of a wide range of theoretical developments in the field of migration and diaspora policy of states, among which are the works of Gamlen (2014), Weinar (2017), Ragazzi (2014), Williams (2018), Elo and Minto-Coy (2018) and some others. Separately, it should be emphasized that for a more correct determination of diasporas, especially in such a complex ethno-confessional region as the Middle East, the authors of this study used the theoretical approaches of M. Raina, which allowed us to get a general idea of the basic characteristics of diasporas (Raina, 2007). G. Sheffer and his work helped to more clearly identify the criteria for attributing one or another ethnic groups to the concept of “diaspora” (Sheffer, 1986). The typology of M. Bruneau also contributed to the clarification of existing types of diasporas (Bruneau, 2010). The authors used a situational analysis of the state’s interethnic policy within the framework of the problem and diagnostic fields of sustainable development. This method made it possible to form an understanding of the potential of diasporas in ensuring the stability of certain states with a complex ethnic composition. Thus, the combination of these theoretical and methodological approaches allowed the authors to formulate the role of diasporas in the sustainable development of Middle Eastern States, using the example of Jordan, which has an extremely specific ethnic composition.

3

Results

Achieving the Sustainable Development Goals involves attracting significant attention to migration issues. Thus, the 2030 Agenda for Sustainable Development recognizes the significant contribution of migration processes to sustainable development. Eleven of the 17 Sustainable Development Goals contain targets and indicators that are applicable to migration, refugees and mobility issues. The refugee problem is particularly relevant for the Middle East region, some countries of which have faced various socio-economic and political difficulties over the past few decades (Johnson, 2020). In particular, an example here is the historically complex political process in Israel, which led to the intensification of migration flows in the region (Bilgin, 2016; Nazarova, 2021; Zarras, 2019). Analyzing the ethnic composition of the modern Hashemite Kingdom of Jordan, we once again point out that its

modern appearance, primarily from the point of view of ethnic composition, is the result of the migration flows noted above (Karsh, 2014). Currently, taking into account all the waves of Palestinian refugees, as well as the high birth rate among this ethnic group, Palestinians make up more than half of the population of Jordan (Stateless Again: Palestinianorigin Jordanians deprived of their nationality, 2010). Thus, the Palestinians form a powerful diaspora in the kingdom, the numerical composition of which can potentially lead to radical changes in the socio-political structure of the state. In this regard, the Jordanian leadership is implementing a whole range of measures aimed at harmonizing socioeconomic processes in the country, including special treatment for Palestinians who have found their home in the kingdom. For example, while retaining the opportunity to return to their historical homeland, Palestinians in various cases acquire or do not acquire Jordanian citizenship. Although most Palestinians have Jordanian citizenship and many have been integrated for a long time, Jordan still considers them refugees with the right to return to Palestine. As of 2020, about two million Palestinians are registered as refugees in Jordan (Gabbay, 2014). In addition, as part of the requirements of the positive contribution of migration processes to sustainable development, the Jordanian leadership gives Palestinians the opportunity to be represented in the national parliament, if possible, find a job in the private and public sectors, there is also a quota system for university admission for Palestinian youth. These facts are directly related to the UN Sustainable Development Goals, which are designed to “promote orderly, safe, regular and responsible migration and mobility of people, including through the implementation of a planned and well-managed migration policy” (UN – Migration, 2021). We should add that Jordan acts in a similar way with regard to Palestinians from Gaza and other persons without Jordanian citizenship (Mirgorod et al., 2021). Despite the difficult economic situation in the country, the authorities in the kingdom are striving to solve problems with the access of children from Gaza to free primary and secondary education, as well as to reduce the cost of admission to local universities. In addition, stateless Palestinians are assisted by the Jordanian authorities (Jordan-Palestinians, 2020) if they face problems when buying and selling property, opening a bank account and performing other daily tasks (Sandin, 2019). From the above information, it can be seen that Jordan is trying to solve the problems of socio-political stability in the country, including its ethnic aspect, and implements an appropriate diaspora policy in the country. Another such example is the Chechen diaspora of Jordan, which is also quite widely represented in many countries of the Middle East region. Natives of Chechnya appeared in Jordan, mainly as a result of three waves of resettlement: the first was the

Diasporic Factor of Sustainable Development of the Middle East States (the Case of. . .

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descendants of the “Kundukhov settlers” of 1865; the second is the descendants of the settlers of 1893–1895, who founded the modern Chechen colony in Jordan; the third is the descendants of the settlers of 1912 (Badaev, 2008). Currently, the number of the Chechen diaspora in the kingdom is relatively small—16,000 people. However, Chechens are actively involved in the socio-political and economic life of the country. We believe that this is due to two factors (Almalik: Chechens historically participated in the construction of Jordan, 2020). Firstly, Chechens, like some other natives of the North Caucasus, founded settlements in Oultrejourdain, where their level of landowning culture was significantly higher than that of the surrounding tribes, which formed the basis of the Jordanian statehood. Secondly, it is the formation of a harmonious socio-political structure of the state, taking into account the rights of all groups and strata of the population, which directly corresponds to the issues of sustainable development (Ganich, 2003). It should be noted that the Chechen population, although very small, has gained a reputation for being extremely loyal to the Hashemite dynasty and is widely represented in high positions in the government and the Jordanian army. These relations can be traced back to the moment when the Chechen community in Jordan supported King Abdullah I when he for the first time came to the region from Al-Hijaz (Saudi Arabia) (Migration and features from the history of Chechnya in Jordan, 2012). Currently, representatives of the Chechen diaspora work in the administration of the King, Crown Prince, Prime Minister and Parliament, hold responsible positions in law enforcement agencies, the Foreign Ministry, etc. We also point out that there are many organizations in Jordan founded by the Chechen diaspora. Among them we will single out: Caucasian Club, founded in 1932 in Sweileh; the Charity Association “Ez-Zarqa”, founded in 1958 in Ez-Zarqa, which has branches in all cities of Jordan with Chechen population; the Association of Friends of the Chechen Republic, founded in 1989; the Association of Caucasian Culture (2006) (All sport, charitable and social institutions, 2021). These structures play a significant role in the socio-political life of Jordan, which further testifies to the high status of the Chechen diaspora in the progressive and sustainable development of this Arab state.

and political shocks, have faced the resettlement of significant groups of the population. The prevailing ethnic composition in some countries of the world can lead to radical changes, both of the states themselves and of entire regions, as well as influence the global agenda. All this, ultimately, can have a direct impact on the problems of sustainable development. Such tendencies are especially clearly manifested in politically difficult regions, for example, in the Middle East, where in the postcolonial period there were many problems associated with interethnic and interconfessional features of a particular state structure. In this regard, the diasporic factor, which is formed by large groups of refugees and migrants from certain countries, is of great importance in the progressive and sustainable development of Middle Eastern States. One of the most striking examples of the described situation is the modern Hashemite Kingdom of Jordan, ethnically formed as a result of complex regional migration processes. The latter led to the mass resettlement of Palestinians to neighboring Middle Eastern States, including the Kingdom. Because of this, by now the Palestinians in Jordan constitute an ethnic majority and form a large diaspora, which, accordingly, has its own political and economic needs, which forces the Jordanian leadership to be in constant search of a balance of interests of various ethnic groups of the population. Such a policy consists, among other things, in working with other diasporas, whose active involvement in the socio-political life of the country is aimed at harmonizing these processes. At the same time, attention is paid even to relatively small ethnic groups. Thus, the example of the Chechen diaspora in Jordan shows that, despite their small share in the total population of the kingdom, Chechens have left a significant imprint in the history of this Arab state and continue to have a significant impact on various spheres of life of the country. Ethnic Chechens are a consolidated national group that preserves the traditions of their people. Representatives of the Chechen diaspora have held and continue to hold high-ranking positions of authority in Jordan. They form various public organizations, foundations and communities. Thus, modern Jordan can serve as an example of how a state can pursue policies related to sustainable development issues, including, inter alia, migration and refugee issues.

4

References

Conclusion

Summing up, we would like to point out that the achievement of the Sustainable Development Goals involves attracting significant attention to the issues of refugees and migration, and also involves the comprehensive work of all states of the world in this direction. This task is especially relevant for countries and regions that, due to various socio-economic

All sport, charitable and social institutions. (2021). Jordanian Chechen Site. http://www.sukhneh.com/‫ﺍﻝﺵيﺵﺍنية‬-‫ﺍﻝﻡؤسسﺍت‬/‫ﺍﻝأردن‬-‫ﺵيﺵﺍن‬. Data accessed 15 Mar 2022. Almalik: Chechens historically participated in the construction of Jordan. (2020). Assawsana.com. https://www.assawsana.com/por tal/pages.php?newsid=179950. Data accessed 20 Mar 2022.

580 Badaev, S. E. S. (2008). Chechen diaspora in the Middle and Near East: history and modernity. Republican Polygraph named after Revolution of 1905. Berdine, M. D. (2018). Redrawing the Middle East: Sir Mark Sykes, Imperialism and the Sykes-Picot agreement. Bloomsbury. https:// doi.org/10.1080/09592296.2020.1760044 Bilgin, P. (2016). What is the point about Sykes–Picot? Global Affairs, 2(3), 355–359. https://doi.org/10.1080/23340460.2016.1236518 Bruneau, M. (2010). Diasporas, transnational spaces and communities. In R. Bauböck & T. Faist (Eds.), Diaspora and transnationalism: Concepts, theories and methods, 3 (1), pp. 35-50. Amsterdam University Press Elo, M., & Minto-Coy, I. (2018). Diaspora networks in international business (Perspectives for understanding and managing diaspora business and resources). Springer. https://doi.org/10.1007/978-3319-91095-6 Gabbay, S. M. (2014). The status of Palestinians in Jordan and the anomaly of holding a Jordanian passport. Journal of Political Sciences & Public Affairs, 1, 1–6. Gamlen, A. (2014). Diaspora institutions and diaspora governance. International Migration Review, 48(1), 180–217. https://doi.org/10. 1111/imre.12136 Ganich, A. P. (2003). Circassian diaspora in Jordan: self-identification, ideas about the historical homeland and influence on the situation in the North Caucasus. Central Asia and Caucasus, 1, 25–29. Johnson, D. E. W. (2020). Iraq: seeking stability after Saddam. In Research handbook on post-conflict state building. Edward Elgar. https://doi.org/10.4337/9781788971645. Jordan-Palestinians. (2020). Palestinians—Minority Rights Group. https://minorityrights.org/minorities/palestinians-2/. Data accessed 10.03.2022. Karsh, E. (2014). The Arab-Israeli conflict: The Palestine war 1948. Bloomsbury. https://doi.org/10.5040/9781472895189.0003 Lélé, S. M. (1991). Sustainable development: a critical review. World Development, 19(6), 607–621. https://doi.org/10.1016/0305-750X (91)90197-P Mebratu, D. (1998). Sustainability and sustainable development: historical and conceptual review. Environmental Impact Assessment Review, 18(6), 493–520. https://doi.org/10.1016/S0195-9255(98) 00019-5 Migration and features from the history of Chechnya in Jordan. (2012). Jordanian Chechen Site. http://www.sukhneh.com//‫ﺍﻝأردن‬-‫ﺵيﺵﺍن‬ ‫تﺍريخية‬-‫وﻡﻝﺍﻡح‬-‫ﺍﻝهﺝرة‬. Data accessed 22 Mar 2022.

A. M. Israilov and D. A. Mirgorod Mirgorod, D. A., Kosov, G. V., Demchenko, D. A., Kharitonova, O. N., & Amosova, E. A. (2021). Socio-economic processes in the middle east and regional security. In E. G. Popkova & B. S. Sergi (Eds.), Modern global economic system: Evolutional development vs. revolutionary leap (Lecture notes in networks and systems, 198) (pp. 338–345). Springer. https://doi.org/10.1007/9783-030-69415-9_39 Nazarova, F. (2021). Ethno-political aspects of the Kurdish problem: an analysis of different approaches. The American Journal of Political Science Law and Criminology, 3(7), 63–67. https://doi.org/10. 37547/tajpslc/Volume03Issue07-10 Ragazzi, F. (2014). A comparative analysis of diaspora policies. Political Geography, 41, 74–89. https://doi.org/10.1016/j.polgeo.2013. 12.004 Raina, M. L. (2007). Home, homelessness and the artifice of memory. In M. I. Singh (Ed.), Contemporary diasporic literature: Writing, history, culture, self. Pencraft. Sandin, B. J. (2019). Because of Palestine: A minor field study on the political participation among Palestinians in Jordan. Uppsala University. Sheffer, G. (1986). Modern diasporas in international politics. Taylor & Francis. https://doi.org/10.2307/1957468 Stateless Again: Palestinian-origin Jordanians deprived of their nationality. (2010). ReleifWeb. https://reliefweb.int/report/jordan/state less-again-palestinian-origin-jordanians-deprived-their-nationality. Data accessed 10.03.2022. UN – Migration. (2021). United Nations official website. https://www. un.org/en/global-issues/migration. Data accessed 10.03.2022. Weinar, A. (2017). From emigrants to free movers: whither European emigration and diaspora policy? Journal of Ethnic and Migration Studies, 43(13), 2228–2246. https://doi.org/10.1080/1369183X. 2016.1274647 Williams, N. (2018). Mobilising diaspora to promote homeland investment: The progress of policy in post-conflict economies. Environment and Planning C: Politics and Space, 36(7), 1256–1279. https:// doi.org/10.1177/2399654417752684 Zarras, K. (2019). The regional sectarian war and Syria. The War for Syria, 7, 50–68. https://doi.org/10.4324/9780429201967-4 Zhang, J. (2019). Research progress on the interlinkages between the 17 sustainable development goals and their implication for domestic study. Acta Ecologica Sinica, 39, 1–11. https://doi.org/10.5846/ stxb201902200299

The Concept of Linguistic Education in the Systematic Implementation of the Goals of Sustainable Human Development: The Noospheric Paradigm Leokadiya V. Vitkovskaya , Igor F. Golovchenko K. Strashkova , and Viacheslav I. Shulzhenko

Abstract

The relevance and feasibility of the presented research are connected with the history of the formation of the problems of sustainable development of mankind, with the definition of the role of thinking and the level of cultural and linguistic education in the systematic achievement of the Sustainable Development Goals (SDGs). The subject of consideration is the processes of development and formation of scientific and theoretical foundations of sustainable development, officially starting from the 1966 UN General Assembly Conference on Environmental Issues, which adopted the International Covenant on Civil and Political Rights, legalized the needs of current and future generations, whose survival depends on the rational use and conservation of natural resources. The conceptualization by world science of historical and philosophical information about the laws of the evolution of nature and society since the mid-twentieth century has led to changes in the paradigm of thinking, including awareness of the expediency of applying a noospheric approach to the synthesis of sciences and to the education system (primarily linguistic), providing the necessary coordination of all spheres of human activity on the path to sustainable development. The object of the research is theoretical and methodological materials and problem studies of the emerging noospherogenesis as a strategy for integrating education, man and nature. The work is based on complex methods of linguo-stylistic, cognitiveconceptual, information-statistical and other types of analysis that allow the use of categories of noospheric thinking. The processes of globalization, awareness of the essence of social relations and the degree of human L. V. Vitkovskaya (✉) · I. F. Golovchenko · I. V. Kicheva · V. I. Shulzhenko Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] O. K. Strashkova North-Caucasus Federal University, Stavropol, Russia

, Inna V. Kicheva , Olga

involvement in specific types of activities, the development of relevant integration technologies during the conquest of space, in the era of digitalization and the creation of artificial intelligence have a significant impact on the definition of the concept of linguistic education, which most optimally contributes to the successful development of the future of mankind. Keywords

Sustainable human development · Sustainable development goals (SDGs) · Linguistic education · Noosphere and V.I. Vernadsky’s noospheric approach · Noolinguistics

JEL Code

I25

1

Introduction

Thousands of years of human evolution allow us to form an idea of the social structure of life on planet Earth, which makes it possible for humanity to overcome various shocks and ongoing changes at all stages of development. The history of civilization gives reason to conclude that a person in the process of practical activity gives priority to his constantly growing needs, strives for the accumulation of material goods and economic growth, which leads to the use of natural resources without taking into account the consequences of damage to the environment. It is well known that the first reflections on the limited resources of the planet and the need to restrain the uncontrolled growth of consumption were expressed by ancient Greek philosophers, although the consideration of socio-economic problems of human development is traditionally associated with the English economist Thomas Robert Malthus (1895), who

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_102

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developed at the beginning of the eighteenth century the hypothesis that the population grows exponentially, and food production and use of resources increase in an arithmetic progression. In the long term, this situation leads to various kinds of disasters (famine, diseases, catastrophes, cataclysms, crises, wars, etc.). In order to exclude such phenomena in the modern world, it is necessary to study the history of the formation of mankind and its connection with the cultural and educational level of society. Naturally, each generation has its own experience, forming traditions and heritage. As is known, at the beginning of the seventeenth century, B. Pascal came to the conclusion: “The past and the present are our means; only the future is our goal” (Pascal, 1995). There is no doubt that the basis for ensuring and improving the normal socio-economic conditions of human existence is laid by education, moreover, it plays a key role in the development of mankind (Ursul & Ursul, 2016). At the same time, the main capital of an educated person (especially a qualified specialist) is a perfect command of the language, since linguistic knowledge is created and accumulated to solve all the tasks of human life. It is significant that the oldest known linguistic traditions—Indian, European (ancient) and Chinese—were formed independently of each other in the 1st millennium BC. Since the earliest times, people have been thinking about the problems of using language and ways of lexical expression of their ideas, including in intercultural communication. Language is an exceptional phenomenon that has no analogues in the cognition of reality, develops and functions according to its own laws. It is important that the key indicator of a high level of speech culture is the intellectual and ethical component of education, without which it is impossible to carry out successful communication, which linguists and scientists, such as, for example, Chilean researchers Maturana H. and Varela F., who believe: “Every human act is performed in language. Every act in language brings into existence a world created together with other people in an act of coexistence, which generates what is inherent only in man. Thus, every human act has an ethical significance, because it represents the act of creation of the human world. This human to human connection is ultimately the foundation of all ethics as a reflection on the legitimacy of the presence of others” (Maturana & Varela, 2001, p. 219). These observations give reason to consider the actions of any individual as a cognitive act, and to perceive life as a whole as cognition, which allows us to be effective in preserving human race. In conditions of increasing dependence on technology and the use of large amounts of information data, it seems important to rely on humanistic approaches to the education system and to increase the role of the humanities in public life. The current stage of globalization of the world community is closely connected with the change in the character of

L. V. Vitkovskaya et al.

thinking, which requires the search for philosophical, historical-cultural, cognitive-conceptual and other strategies and concepts of education focused on solving planetary problems and ensuring the future development of society. The scientific and theoretical foundations and methodological approaches to these problems, to understanding the dialectics of planetary development are the subject of study by many well-known scientists of the world (in our opinion, the Internet allows us not to cite numerous materials on the study of the noosphere). The potential of world science in developing concepts of sustainable development makes it possible in the era of globalization to form a civilization capable of effectively resisting uncontrolled human actions. In this regard, the question of the level of linguistic education, the role of language and the peculiarities of the changing attitude to it as a space for the expression of the noosphere, to the formation of noospheric thinking in the development of valuesense constructs that can ensure the future sustainable development of society becomes relevant.

2

Materials and Methods

The material of this analysis is the research of the scientific and theoretical foundations of sustainable development that have passed a certain evolutionary path. The methodology of the work is based on complex methods that allow detecting the manifestation of the features of noospheric thinking in the interpretation of texts, including linguistic-stylistic, structural-semantic, comparative-historical, philosophical-methodological analyses using system-scenario elements and expert-evaluation techniques. The information base of the research consists of the laws on education, the current educational standards of higher professional education and publications of scientists on the studied issues. Currently, traditional academic approaches are insufficient for the transition to transformative and informational education that can contribute to the implementation of new tasks and goals of sustainable development. It is education that should stimulate comprehensive, cognitive-conceptual, critical, empathic, and most importantly, systemic and predictive thinking, since the world at the beginning of the twenty-first century is faced with the need to develop a model of civilization that can survive amid the upcoming global sociopolitical and socio-economic transformations. In this regard, the United Nations is the initiator of consideration of issues of further sustainable development that goes beyond state borders. It is believed that the history of sustainable development dates back to 1966, when the UN General Assembly Conference on Environmental Issues was held, which adopted the International Covenant on Civil and Political Rights.

The Concept of Linguistic Education in the Systematic Implementation of the Goals of. . .

UNESCO pays special attention to education for achieving sustainable development. Separately it is worth noting the activities of the so-called Club of Rome (an international public organization established in 1968), which put forward the idea of “global dynamic equilibrium”. The attention of the world community was attracted by reports to the Club of Rome, among which “Humanity at a turning point” (1974), “No limits to learning” (1979), “Limits of growth” (1991), etc. In 1987, the UN World Commission on Environment and Development published the well-known Gro Harlem Brundtland report “Our Common Future”, in which the idea of sustainable development is presented as a balance between generations: “Sustainable development is development in which the needs of current generations are met without compromising the ability of future generations to meet their own needs” (Our common future, 1989). The history of the peculiarities of the social development of mankind is regularly considered at many Earth Summits: in Rio de Janeiro in 1992, in New York (June 1997), in Johannesburg (August-September 2002), as well as at meetings of various levels in 2005, 2008, 2010, 2012, 2013, etc. It is valuable that the main goal of the development of civilization is education and upbringing, because only a society with an ideology relevant to the epoch is able to develop innovatively, successfully, and sustainably. It is said that “people change the world”, but the world also changes people, i.e. this is a two-way process, at the same time complex and closely related to culture and education. This is evidenced, for example, by such official analyses and reports: “Futures of education: learning to become”, “Rethinking education: education as a universal good?”, “Learning to be: the world of education today and tomorrow” (1971–1972) “Education: the hidden treasure” (1993–1996), etc. As a result of more than half a century of discussions on the preservation of life on the planet, the UN Summit on September 2, 2015 approved the resolution “Transforming our world: the 2030 Agenda for Sustainable Development” (Transforming our world: The 2030 Agenda for Sustainable Development, 2015), in which seventeen Sustainable Development Goals (SDGs) were developed, supported by 193 countries. It is important for us that of the 17 UN Sustainable Development Goals, the fourth point is aimed at ensuring that every person receives high-quality and lifelong education. Goal 4 is divided into 10 sub-goals, the sixth of which concerns literacy, which, as specifically stated, contributes to reducing human vulnerability, eradicating poverty and increasing overall sustainability in the modern world. At the same time, the conditions of globalization presuppose the formation of such a concept of education, the importance of which will be exaggerated due to the fact that humanity must master positive skills of a harmonious attitude to nature and to the processes taking place in society.

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The modern scientific paradigm initiates the development of ideas that take into account the interests of countries and peoples, combining the unity of nature and society, science and politics, education and upbringing in a constructive, natural, axiologically and ethically safe direction. This approach, as noted in the latest research, has much in common with the concept of the noosphere put forward by the Russian academician Vernadsky (1967, 1991, 2002). Although the normativity of noospheric processes and representations is beginning to gain theoretical recognition, but by now they are not widely and sufficiently fully covered in research practice. The concept of “sustainability of life” introduced by V.I. Vernadsky is interpreted by him as the ability of a person to continuously perform his functions: “In the many thousands of years of historical tragedy, which we call world history, the question of the best way of life and the ways in which this can be achieved has repeatedly arisen. Man did not put up with the conditions of his life” (Boytsov et al., 2007). In the future, the concept proposed by the scientist is transformed into the term “sustainable development”, used by the international community as the most important direction of the organization of existence on the planet.

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Literature Review

It is well known that the concept of the noosphere as a “thinking” shell of human consciousness, which is gaining popularity, was proposed by French scientists Eduard Leroy (1927) and Pierre Teilhard de Chardin (1957) under the influence of lectures by V.I. Vernadsky at the Sorbonne in 1922–1923. In the subsequent time, the theory of the noosphere is significantly enriched by expanding the aspects of its scientific and philosophical interpretation, introducing new concepts and terms that deepen the understanding of the specifics of this worldview system. The phenomenon of noospheric consciousness is repeatedly characterized in the works of scientists of the twentieth century studying the scientific ideas of V.I. Vernadsky, whose teaching on the transition of the biosphere to the noosphere allows to develop categorical concepts of “noospheric philosophy”, including the terms “noospheric paradigm of education” (1994), “noospheric reality” (1996), “noospheric universe” (1997). At the same time, the designated semantic space is multiplied by such a terminological network as “noospheric idea”, “idea of the noosphere”, “noospheric law”, “noospheric system”, “noospheric tradition”, “noospheric imperative”, etc. The noospheric approach significantly expands the scientific and ideological boundaries of perception and description of language as a sign system, moreover, based on the principles of governance of the linguistic process, it makes it possible to consider language in its integrity. It is

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characteristic in this regard that the proposed model of language can be represented by the relations of Vernadsky’s noosphere (Vernadsky, 1967, 1991, 2002) and Lotman’s semiosphere (Lotman, 2002): the semiosphere forms a communicative-semiotic structure of the biospherenoosphere, organized by the human mind. The scientific argumentation of the noospheric vision of language as a phenomenon of human mental activity leads researchers to the conclusion that these issues are the subject of study of a new type of linguistics—noolinguistics (Noolinguistics and noospheric education, 2009). In its broadest sense, the concept of “noospheric language” indicates the relevance of the formation of scientific thought as a planetary phenomenon that emerged at the intersection of many linguistic and cultural fields. Naturally, the study of the formation and role of noolinguistics is the task of future linguists. The birth of neolinguistics is conditioned by those transformations in scientific knowledge that make it possible to adequately describe the changing reality, respond accordingly to it and use human capabilities to survive in conditions of evolutionary transformation of both man and nature.

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Results

Education, which forms the competencies of a citizen of the world, aimed at harmonizing relations between people, society and nature, at understanding the objective essence of the processes taking place in society and at recognizing the priority of the public over the personal, is the most important component in achieving all the Goals of Sustainable Development. Globalization, the understanding of social relations and human involvement in collective activity during the conquest of space, the development of technologies in the era of digitalization and the creation of artificial intelligence, naturally affect the ways of organizing and evaluating education by society, as well as the development of the concept of linguistic learning in the noospheric paradigm. Linguistics and linguistic education face an important and responsible task—to ensure the use of diverse language resources, because only a competent command of the language allows a person to increase his intelligence, master various systems of thinking and communication for the implementation of truly humanistic transformations of modern society.

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Discussion

It is believed that the twentieth century was the century of the full implementation of the discoveries of previous eras, which provided significant growth of the world economy, but in many ways revealed an incomplete understanding and

underestimation of the laws of nature by man. The way out of this situation should be provided by the implementation of universal education for all inhabitants of the planet throughout their lives. High-quality linguistic education is the basis of sustainable development aimed at ensuring the protection of our planet and improving the quality of life. In recent years, the understanding of the expediency of applying the noospheric approach to the synthesis of sciences and to the education system has been generalized in the studies of such scientists as Bolshakov (2011), Maslova (2002), Smirnov (2015), Subetto (2017), Ursul and Ursul (2016), whose works are devoted to the problems of interaction between thought, word, human activity, nature. Thus, academician Subetto notes: “The noosphere is a complex category. And its main meaning is a new state of the Biosphere, in which the collective human mind—social intelligence—becomes a force for the harmonization of socio-natural restrictions, begins to control socio-natural development. . .The main point is that Noospherism is born in the Era of the Great Evolutionary Breakpoint at the turn of the twentieth and twenty-first centuries, when Nature and the Cosmos have already raised the question that humanity cannot live “in the old way” on planet Earth” ((Subetto, 2017), p. 44).

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Conclusions

Opinions have been repeatedly expressed that by the beginning of the twenty-first century, the world had overcome a number of turning points of the previous decades—obvious climate changes, loss of biological diversity, acceleration of the development of infections, etc. The future of humanity is closely connected with the noospheric paradigm of development, science, culture, education and society. The Resolution adopted by the UN General Assembly “Transforming our world: the 2030 Agenda for Sustainable Development” (Transforming our world: The 2030 Agenda for Sustainable Development, 2015) has developed a global strategy for resolving the most acute problems facing the Universe, and a collective goal has been actually determined as a massage to humanity to take part in the integration processes of creating real conditions for the sustainable development of mankind. The philosophical approach to understanding the meaning of sustainable human development, which has been actively discussed in the political and scientific environment of the last decades of the twentieth and the beginning of the twentyfirst century, suggests its further convergence with the interdisciplinary discourses of the fundamental concepts of “humanism”, “education”, “culture”. Currently, the idea of the global nature of language is clearly heard as a constantly recreating system of codes and symbols that reflects the multilayered world of man and the surrounding nature.

The Concept of Linguistic Education in the Systematic Implementation of the Goals of. . .

There are less than 10 years left to implement global efforts to achieve the SDGs by 2030. It is the emerging view, that noospheric thinking will dramatically increase its role in the systemic implementation of sustainable development. This process manifests itself in a noticeable way at the present time. It seems that a multifaceted linguistic-cognitive education focused on the future is a key priority area which leads to the formation of the person reasonable living in unity with nature, culture, and society.

References Bolshakov, B. E. (2011). Science of sustainable development. RANS. Boytsov, B. V., Kryanev, Y. V., & Kuznetsov, M. A. (2007). Anthology of Russian quality. Innovation Fund “ROSISPYTANIYA”. Leroy, E. (1927). The idealistic requirement and the fact of evolution. Former Bookstore Furne, Boivin et Cie, Publishers. Lotman, Y. M. (2002). Semiosphere. Iskusstvo-SPb. Malthus, T. R. (1895). Experience of the population law. http://www. demoscope.ru/weekly/knigi/maltus/maltus.pdf. Data accessed 01.02.2022. Maslova, N. V. (2002). Noospheric education: Scientific basics. Concept. Methodology, technology. Monograph. Publishing House of Institute of Cold Dynamics. Maturana, H. R., & Varela, F. J. (2001). Tree of knowledge: The biological roots of human understanding. Progress-Tradition. Noolinguistics and noospheric education. (2009). In A. I. Subetto (Ed.), Noospheric education in the Eurasian space: Collective scientific

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monograph (pp. 454–463). Asterion; Publishing House of N.A. Nekrasov Kastroma State University. Our common future. (1989). Report of the International Commission on Environment and Development. Progress. Pascal, B. (1995). Thoughts. Sabashnikov Publishing House. Smirnov, G. S. (2015). The formation of the noosphere: philosophical and methodological problems of the evolution of consciousness. Ivanovo State University. Subetto, A. I. (2017, January 28). Noospherism is a scientific and ideological system and a new paradigm of history: the authors’ reflexive and systematic analysis of the research and generalizations. Noospherism is a new way of development: dedicated to the 80th anniversary of Alexander Ivanovich Subetto: a collective scientific monograph. St. Petersburg. Center for Scientific and Information Technologies “Asterion”. Teilhard de Chardin, P. (1957). The human phenomenon. Introduction to a scientific study of the human phenomenon. In Pierre Teilhard de Chardin Oeuvres, 3: The vision of the past (pp. 75–111). Du Seuil. Transforming our world: The 2030 Agenda for Sustainable Development. (2015). United Nations. https://sdgs.un.org/publications/ transforming-our-world-2030-agenda-sustainable-develop ment-17981. Data accessed: 8.02.2022. Ursul, A. D., & Ursul, T. A. (2016). The key role of education in achieving sustainable development goals. Sociodynamics, 4, 1–18. https://doi.org/10.7256/2409-7144.2016.4.18218. https://nbpublish. com/library_read_article.php?id=18218. Data accessed 22 Jan 2022 Vernadsky, V. I. (1967). Biosphere: selected works on biogeochemistry. Mysl. Vernadsky, V. I. (1991). Scientific thought as a planetary phenomenon. Nauka. Vernadsky, V. I. (2002). Biosphere and noosphere. Iris-Press: Rolf.

Changes in the System of Education Financing in the Republic of Kazakhstan to Achieve the Sustainable Development Goals Maslikhat Zamirbekkyzy Niyazbekova

Abstract

The paper examines the tools for financing higher education that contribute to achieving the Sustainable Development Goals, which are a benchmark for all UN member countries. An integral part of building a new development model for any country is reforming the education system to meet the needs of a changing economy. Investment in education is the primary key to developing human capital in Kazakhstan. The solution of the primary task of increasing investment in the education system directly affects the formation of human capital and lays the foundation for the future prosperity of nations. This paper discusses the mechanism of applying the indicators of the Sustainable Development Goals to the documents of the state planning system of the Republic of Kazakhstan. Additionally, it compares the indicators of the Sustainable Development Goals to those of the Global Competitiveness Index. The paper also highlights current issues in the practical application of the system of education financing in Kazakhstan. Keywords

Sustainable development goals · Education reform · Economic growth · Human capital · Research and development

JEL Codes

O1 · O3 · O4

M. Zamirbekkyzy · Z. M. Bulakbay L. N. Gumilyov Eurasian National University, Astana, Kazakhstan e-mail: [email protected] S. U. Niyazbekova (✉) Financial University under the Government of the Russian Federation, Moscow, Russia

, Zhanat M. Bulakbay

1

, and Shakizada U.

Introduction

The main issue on the international agenda of the world community is the development of humanity to meet the needs of the present generation. Moreover, it seeks not to undermine the ability to meet the human needs of present and future generations. In this respect, developed countries provide full support and assistance to developing countries through institutional development. In the declaration “Transforming Our World: The 2030 Agenda for Sustainable Development,” the United Nations General Assembly articulated and adopted the Sustainable Development Goals (SDGs) (UN General Assembly, 2015). Getting a quality education lays the foundation for sustainable development. It also plays a key role in providing a way out of poverty. Education is an important step in achieving the rest of the SDGs. More than 100 countries worldwide decided to close educational institutions due to the COVID19 pandemic. In turn, this led to serious disruptions in education. The reformed educational system will ensure the development of Kazakhstan’s human capital. It will become a new round of increasing the country’s competitiveness based on sustainable economic growth. If the educational system of Kazakhstan has sufficient financial potential, it will guarantee the creation of favorable conditions for developing human capital to apply it to the demand and competitiveness of Kazakhstani education in foreign markets. “SDG 4 is the starting point for all the other goals,” and attention must be paid to the scale of the unmet SDGs. It is necessary to focus on action in four areas: • New approaches to financing • New ways to use innovation to deliver education in hardto-reach places • Lifelong learning

Moscow Witte University, Moscow, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_103

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• Delivering education in humanitarian crisis (OECD, 2012, p. 19)

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Literature Review

The authors of this research conducted a theoretical analysis of scientific literature, statistical data, and periodicals to study the works of foreign and domestic scientists. Statistical materials from the Bureau of National Statistics of the Ministry of National Economy of the Republic of Kazakhstan were used in the analysis. UN personnel have made fundamental scientific, theoretical, methodological, and practical contributions. Since the SDGs have been defined relatively recently, domestic scholars consider theoretical and methodological aspects in analyzing the implementation of the SDGs. Scholars most frequently discuss funding for the SDGs in specific areas of the economy, including health care and education (Peretet, 2019). Recommendations for financing regional development were reviewed in the document “Financing the Sustainable Development Goals: Lessons from Public Expenditures for Achieving the SDGs” (UN General Assembly, 2015). E. V. Vodopyanova stated that global taxation should replace the philanthropic model (Vodopyanova, 2017). S. Anzorova, S. Sarbassova, Z. Dzhubalieva, et al. reviewed the SDG funding mechanism and discussed SDG 4 funding in the context of public and private funding mechanisms (Anzorova et al., 2021). Of particular interest is the World Bank policy research working paper “Efficiency of Public Spending in Developing Countries: An Efficiency Frontier Approach” (Herrera & Pang, 2005). B. V. Salikhov and A. V. Semenov attempt to quantify the measurement of effectiveness. The authors describe that they estimate performance rates from 10 to 30% (Salikhov & Semenov, 2019).

3

Methodology

This research reflects the 30-year journey of Kazakhstan’s education system, which has undergone significant changes. The authors analyzed the strengths and weaknesses of the education system of the Republic of Kazakhstan. The methodological basis of this research includes theoretical and empirical research methods.

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Results

Kazakhstan shares the priorities of the 2030 Agenda and actively promotes the SDGs, including most of the indicators in various strategic planning documents. The country worked

on nationalizing the SDGs by approving a nationalized list of 17 goals, 169 targets, and 297 indicators, with the addition of 76 national indicators, 35 of which were suggested additionally (United Nations, 2015). Determination of the most effective methods of reforming the education system in the context of its reform affects the development of financial methods to ensure its competitiveness, efficiency, and effectiveness using advanced technology. The problems of the education system are reflected in all of UNESCO’s policy documents (UNESCO and UNICEF, 2015). Additionally, the increasing role of education goes hand in hand with increasing demands on its quality. The quality of human resources and, above all, the state of preparation of specialists with higher education capable of solving the emerging complex problems in various fields of science have become priority national problems in the country (Di Gropello, 2006; UNESCO, 2014, 2015). Education is believed to be more conservative and less sensitive to the formation of changes. Thus, global trends in education brought the needs in accordance with the requirements of the international labor market. It should be noted that the influence of universities on the country’s economic development has been proven. This means that the more universities we have, the more expansive the growth will be. Given the different levels of development and stages of economic and social reform worldwide, the degree to which the educational landscape is transforming varies from region to region. As a result, there will be different starting points for ongoing educational reforms. In some countries, access to education remains a serious problem. Other countries face the reality of population aging and the limited capacity of governments to fund higher education and maintain its quality, standards, and norms. Given that the impact of globalization and technological development has brought countries and remote regions closer together, a higher level of cooperation and institutional partnership is needed to promote sustainable development, especially among the poorest regions (QS Rankings, 2020). Developed countries could contribute to the development of capacities of less developed countries through the improvement of access to education by providing expertise and skills and encouraging capital flows to invest in education. After all, universities worldwide are tasked with training highly qualified citizens in today’s environment. The world is dramatically changing, and education goals are changing accordingly. Over the past 5 years, Kazakhstan’s education system has faced economic and social challenges. Substantive change continues to require new approaches to funding the entire education system. The continuous expansion of higher education presents numerous new challenges and new opportunities for governments and institutions; how they are governed depends directly on their relative stage of development or maturity.

Changes in the System of Education Financing in the Republic of Kazakhstan to. . .

However, due to the COVID-19 pandemic faced by almost all countries worldwide, the education system has shown some lag in an era when advanced technology must be widely used. Due to the growing demand of students for higher and postgraduate education, governments worldwide are facing problems with the budget funding of public universities. Virtually every country provides its citizens with a basic (primary and secondary) level of education, but higher education is most often fee-paying. The experience of innovative development of the economy of different countries shows a stable and innovative system of education and science, and it is aimed at the development of human capital and the economy of the country. According to the study conducted by W. Morgan and I. White (Morgan & White, 2013), the top five countries for access to higher education are the USA, the UK, Canada, Germany, and France. One of the leading positions of Sweden (eighth place) is provided by a combination of the low cost of education, numerous grants, and educational credits. The Netherlands (ninth place) supports students from socially disadvantaged backgrounds. In particular, Norway, the USA, and the UK provide their citizens with free higher education and send them to study and train abroad. Students at American universities may also receive government support through federal student grants and loans. Government support for private higher education is available in India, as well as in countries such as the Philippines and Japan. The share of spending on higher education in public expenditure in all EU countries varies between 2–3% and averages 5–7% of the countries’ GDP (World Bank, n.d.). Despite differences in the economic development of EU countries, all governments allocate sufficient financial resources to education. One of the most important indicators of the level of financial support for a country’s education system is the level of national spending on education to GDP. Russia and South Korea spend 3.8% and 4% of GDP, respectively. Australia and Estonia spend more than 5%, while Norway and Sweden spend 7.7% of GDP on education. One of the key indicators of improving the country’s competitiveness of education and human development is the expenditure on research and development (R&D), which has remained at a low level of GDP in recent years. Additionally, as expressed in the number of publications in international peer-reviewed scientific journals, Kazakhstan has not succeeded in terms of R&D results, showing weak values and lagging far behind advanced countries. The innovation development depends on the results of completed R&D or other scientific and technological advances and whether the results of R&D will be implemented in a new technological process that can be applied in practice. In Kazakhstan, the amount of domestic spending on R&D increased fourfold from 2005 to 2019. The largest amount of domestic spending on R&D is in three regions: the city of

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Almaty, the city of Nur-Sultan, and the Mangystau Region (Bureau of National Statistics of the Ministry of National Economy of the Republic of Kazakhstan, n.d.). According to the Bureau of National Statistics of the Ministry of National Economy of the Republic of Kazakhstan, the number of organizations (enterprises) performing R&D in 2019 equaled 386. The number of organizations has been decreasing since 2007 (438 organizations). The number of employees performing R&D peaked at 25,793 in 2014, gradually declining to 21,843 in 2019 (Bureau of National Statistics of the Ministry of National Economy of the Republic of Kazakhstan, n.d.). Kazakhstan ranks 101st in the WEF GCI 2019 “R&D expenditures, % of GDP,” with the country dropping another seven positions compared to last year’s results (Schwab, 2019, p. 317). However, the country ranks 97th out of 129 countries in the Global Innovation Index for “Gross R&D expenditures” (World Intellectual Property Organization (WIPO), 2021) and 61st out of 63 countries in the IMD ranking for “Total R&D expenditures” (International Institute for Management Development (IMD), 2021). The indicator’s share of the overall GCI rating is 0.83%. It should also be noted that despite the growth of domestic spending, the share of domestic spending in GDP has declined significantly over the past 15 years. Thus, while domestic spending was 0.25% of GDP in 2003; in 2019, it fell to 0.12% of GDP. GDP growth is now far outpacing the growth of domestic R&D spending. The 2020 edition of the Global Competitiveness Report, first released in 1979, contains the Global Competitiveness Index 4.0 (GCI 4.0). As the decade draws to a close and we look to the dawn of the 2020s, GCI 4.0 offers insight into the economic prospects of 141 countries. The GCI rating is calculated from 103 indicators. In turn, Kazakhstan ranked 55th in the GCI rating and improved its rating by four positions compared to 2018 (Schwab, 2019, p. 317). Kazakhstan ranked 55th in the 2019 rankings, showing an improvement of four positions over last year (59th place in 2018); out of 12 competitiveness factors, there was an improvement on five pillars, a decrease on four pillars, and three pillars positions remained unchanged. Kazakhstan is at an average level in “Education and Skills”—57th place. In terms of “Scientific Publications,” Kazakhstan ranks 111th in the 2019 ranking, dropping one position (110) from the last 2018 results (Schwab, 2019, p. 317). In 2019, the GCI’s indicators of the Republic of Kazakhstan in terms of human capital development scores in surveys of CEOs ranked 77th in staff qualifications (76th in 2016), 90th in quality of professional education (92nd in 2016), and 48th in critical thinking in learning (45th in 2016) (Schwab, 2019, p. 317).

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In 2020, ten Kazakh universities in the QS WUR ranking showed the best results, of which one university (Al-Farabi Kazakh National University) entered the top 300 (from 2016, ranked 207th). The best universities are the L. N. Gumilyov Eurasian National University (418th place), the M. Auezov South Kazakhstan State University (491st place), and the Abay Kazakh National Pedagogical University (561st place) (National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken”, n.d.). For the past 3 years, at the state level, the National Chamber of Entrepreneurs of Kazakhstan “Atameken” has conducted an independent assessment of educational programs of higher educational institutions in Kazakhstan on the following indicators: employment rates of graduates (60%), the relevance of the content of educational programs (38%), and achievements of students (2%) (National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken”, n.d.).

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Conclusion

One of the challenges of reforming the education system is to transform the financial management of educational institutions to stimulate the achievement of all SDGs. In this regard, the task of financial management is to improve the economic efficiency of educational institutions, improve financial reporting, and manage educational institutions in terms of the financial aspect. In the future, reviewing the structure of R&D funding is necessary. Kazakhstan needs to introduce special incentives for developing R&D. It is necessary to revise legislation and create a platform for an innovative breakthrough. The development and implementation of an effective funding model will contribute to forming an advanced education system that meets the requirements of a changing world.

References Anzorova, S., Sarbassova, S., Dzhubalieva, Z., Meldebekova, A., Zhapanova, M., Zhumadilova, G., & Zubets, A. (2021). Environmental education as a basis for sustainable development of the environment. IOP Conference Series: Earth and Environmental Sciences, 937, 042007. https://doi.org/10.1088/1755-1315/937/4/ 042007 Bureau of National Statistics of the Ministry of National Economy of the Republic of Kazakhstan. (n.d.). Official website. Retrieved from https://stat.gov.kz/. Accessed 20 June 2022. Di Gropello, E. (Ed.). (2006). Meeting the challenges of secondary education in Latin America and East Asia. World Bank. https:// doi.org/10.1596/978-0-8213-6645-5 Herrera, S., & Pang, G. (2005). Efficiency of public spending in developing countries: An efficiency frontier approach (Working paper

3645). World Bank Policy Research. Retrieved from https:// openknowledge.worldbank.org/bitstream/handle/10986/8325/ wps3645.pdf?sequence=1&isAllowed=y. Accessed 20 June 2022. International Institute for Management Development (IMD). (2021). World digital competitiveness ranking 2021. Retrieved from https://www.imd.org/globalassets/wcc/docs/release-2021/digital_ 2021.pdf. Accessed 20 June 2022. Morgan, W. J., & White, I. (2013). Looking back to see ahead forward: The Faure and Delors reports and the post-2015 development agenda. Zeitschrift Weiterbildung, 4, 40–43. National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken”. (n.d.). Official website. Retrieved from https:// atameken.kz/ru. Accessed 20 June 2022. OECD. (2012). OECD week 2012: Gender equality in education, employment and entrepreneurship: Final report to the MCM 2012. OECD. Peretet, R. A. (2019). The role of information technologies in the transition to a closed-cycle economy. Educational Resources and Technologies, 3(28), 74–82. https://doi.org/10.21777/2500-21122019-3-74-82 QS Rankings. (2020). QS world university rankings, 2020. Retrieved from https://www.topuniversities.com/university-rankings/worlduniversity-rankings/2020. Accessed 20 June 2022. Salikhov, B. V., & Semenov, A. V. (2019). The essence of sustainable development: definition of key concepts and qualitative integrity. Moscow Witte University Bulletin. Series 1: Economics and Management, 3(30), 7–14. https://doi.org/10.21777/2587-554X-2019-37-14 Schwab, K. (Ed.). (2019). The global competitiveness report, 2019. World Economic Forum. Retrieved from https://www3.weforum. org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf. Accessed 20 June 2022 UNESCO. (2014). EFA Global monitoring report. Teaching and learning: Achieving quality for all. UNESCO. Retrieved from https://unesdoc.unesco.org/ark:/48223/pf0000225660. Accessed 20 June 2022 UNESCO. (2015). EFA Global monitoring report. Education for all 2000–2015: Achieving quality for all. UNESCO. Retrieved from https://in.one.un.org/wp-content/uploads/2016/09/232205e.pdf. Accessed 20 June 2022 UNESCO and UNICEF. (2015). Solving the failed promises of education for all. Conclusions of the Global Initiative on Out-of-School Children. UNESCO Statistical Institute. UN General Assembly. (2015). Financing the sustainable development goals: Lessons from public expenditures for achieving the SDGs resolution “transforming our world: The 2030 agenda for sustainable development” (adopted 25 Sept 2015). Retrieved from https://www. un.org/en/development/desa/population/migration/generalassembly/ docs/globalcompact/A_RES_70_1_E.pdf. Accessed 20 June 2022. United Nations. (2015, June 30). Global sustainable development report, 2015. Sustainable Development Division. Retrieved from https:// www.un.org/en/development/desa/publications/global-sustainabledevelopment-report-2015-edition.html. Accessed 20 June 2022. Vodopyanova, E. V. (2017). Features of interaction of scientific and educational technologies. Educational Resources and Technologies, 1(18), 3–8. Retrieved from https://vestnik-muiv.ru/en/article/ osobennosti-vzaimodeystviya-nauchnykh-i-obrazovatelnykhtekhnologiy/. Accessed 20 June 2022 World Bank. (n.d.). World development indicators. Retrieved from https://databank.worldbank.org/source/world-developmentindicators/preview/on. Accessed 20 June 2022. World Intellectual Property Organization (WIPO). (2021). Global Innovation Index 2021: Tracking innovation through the COVID19 crisis. Retrieved from https://www.wipo.int/edocs/pubdocs/en/ wipo_pub_gii_2021.pdf. Accessed 20 June 2022.

International Tax Transparency: Incorporating the Provisions of International Agreements in Russia’s Financial Legislation Ekaterina A. Tsepova

Abstract

This paper addresses issues related to the incorporation of the provisions of international tax control agreements into Russia’s financial legislation. The paper reviews key pieces of legislation forming the foundation of the international tax transparency framework globally and in the Russian Federation. These legal acts cardinally change the nature of financial control exercised by the countries over taxpayers’ cross-border transactions. When the Russian Federation joined the automatic tax information exchange network, its tax administration was enabled to regularly receive information about accounts opened by Russia’s tax residents in financial institutions outside Russia in sufficient detail to keep tabs on transactions that are important for taxation and currency control. When collecting and processing the material, the author applied the theoretical methods of formal and dialectical logic, description, comparison, analysis, and interpretation of legal norms. The adaptation of the Russian legislation to the Common Reporting Standard for the Multilateral Competent Authority Agreement (CRS MCAA) provided the needed clarity for Russia’s tax residents obligated to file reports about their financial assets. Simultaneously, certain provisions of Russian law still need to be improved and adapted to contemporary economic realities. Keywords

Tax transparency · CRS · Financial institution · Financial asset

JEL Codes

G18 · K11 · K22 · O16 · O38 E. A. Tsepova (✉) Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

1

Introduction

Legal relations between the country and its tax residents who own assets in other jurisdictions have been a subject of great academic and practical interest across the globe. As the mobility of capital has grown in a globalized environment, so have the risks of tax evasion through taxable base erosion and the shifting of profits to lower-tax jurisdictions. The problems that cause concern include the opportunities available to taxpayers to minimize their taxes by using crossborder financial transactions and to shift their assets to offshore jurisdictions (Frolova & Tsepova, 2021; Morten & Zeume, 2018; Oats & Tuck, 2019). The country can efficiently ensure tax compliance on the part of those among its residents who own assets in other jurisdictions only when it partners up with other countries in the area of tax control (Pistone, 2014). The main condition for such cooperation is international tax transparency, enabling the country to act efficiently (Meyer, 2013; Tarakanov et al., 2019). The legal foundation of international tax transparency was laid with the adoption of the Convention on Mutual Administrative Assistance in Tax Matters in Strasbourg on January 25, 1988. The Convention provides for a variety of methods. The countries that ratify this Convention can exchange tax information, including such methods as obtaining information at request, pro-active information exchange, and automatic information exchange (OECD, 1988). Currently, the Convention has 117 participants, including the Russian Federation, which ratified it on November 4, 2014 (OECD, 2022). However, the tax information exchange among state parties to the Convention was based mostly on bilateral intergovernmental agreements. The exchange was not comprehensive, and the tax authorities had limited access to information about the financial statements of their tax residents in other jurisdictions because the information was provided at request.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_104

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To efficiently detect, prevent, and stop tax offenses, countries had to change their mode of financial control— from selective to blanket. In February 2014, the OECD, together with representatives of G20 countries, produced the Common Reporting Standard (CRS). The CRS describes in detail the types and methods of data collection that must go into the automatic financial information exchange network. The first stage of the CRS incorporation was completed when the county joined the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS MCAA). Members of this exchange network automatically exchange information every year on accounts opened by tax residents (individuals or legal entities) of one country in financial institutions of other countries (Levashenko & Koval, 2018). Financial institutions are responsible for collecting these data and establishing their clients’ tax residency status. This agreement makes the CRS prescribed for the automatic tax information exchange legally binding (OECD, 2014). An inquiry into the formation of the international tax transparency network would also benefit Russia’s financial law scholarship. Joining and implementing international agreements points to a new direction for developing Russia’s financial legislation.

2

Materials and Methods

The author applied the content analysis method as an instrument to explore the process of incorporating the international tax control agreements into Russia’s financial legislation. The results are used to assess the impact of the international tax transparency network on Russia’s legislation in the area of taxation and currency regulations.

3

Results

International law does not define “international tax transparency.” In some cases, it is interpreted as a state of international tax relations in which the tax authorities of different countries can freely obtain from each other the complete information necessary to ensure that their tax residents pay taxes in full and on time. The 2016 report of the Global Forum on Transparency and Exchange of Information for Tax Purposes also states that “the improvements in international tax transparency that it has brought about will go a long way to providing tax administrations everywhere with a much more comprehensive picture of the full spectrum of their taxpayer’s international activities” (OECD, 2016a).

Oftentimes, international acts interpret tax transparency more narrowly, referring to qualitative characteristics of tax information used in the exchange, such as the degree of correctness and completeness of this information for the purposes of tax control. The Standard for Automatic Exchange of Financial Account Information in Tax Matters states the following: “Recognising the tremendous progress achieved by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) in ensuring that international standards of transparency and exchange of information on request are fully implemented around the globe” (OECD, 2017b). The next meaning of “international tax transparency” is linked to the annual tax transparency assessment carried out by experts and the assignment of ratings to all members of the Global Forum on Transparency and Exchange of Information for Tax Purposes (presently, this is 163 countries and territories). The ratings are assigned based on an analysis of state tax exchange laws and enforcement practices (OECD, 2017a). J. Owens points that “the implementation of the CRS MCAA became a big step in the field of tax control of cross-border transactions effected by individuals because it enables tax administrations of the state parties to the Convention to obtain regularly and without hindrance data about accounts kept by these states’ tax residents at financial institutions outside Russia in sufficient detail to ensure tax compliance” (Owens, 2015). Until recently, the exchange of tax information was carried out mainly on request based on intergovernmental agreements and was selective. Since all CRS MCAA member countries collect, analyze, and transfer information to each other on the financial accounts of taxpayers in accordance with the CRS, it can be declared that this agreement has been successful in creating a single field of financial control in the area of international taxation. By now, signatories of the agreement include 114 countries and territories, accounting for 75% of the global GDP (International Monetary Fund (IMF), 2021; OECD, 2021). It should be remembered that signing the CRS MCAA is only one of the steps a country needs to take to join the international automatic tax information exchange network. This stage does not directly lead to the beginning of participation in the information exchange with all other signatories of the CRS MCAA. To activate automatic exchange between any two parties to the CRS MCAA, these two countries must express their intention to exchange tax information with each other. They must communicate their intention in writing to the relevant OECD committee. Another instrument regulating international tax information exchange is the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports

International Tax Transparency: Incorporating the Provisions of International. . .

(CBC MCAA), signed pursuant to Action 13 of the OECD’s Action Plan on Base Erosion and Profit Shifting (OECD, 2013). The OECD developed a single electronic format of country-by-country reports (OECD, 2016b) for the information exchange among signatories of the agreement. Taxation practices of a particular country can be influenced by factors such as leftovers of historical experiences in the structure of their fiscal systems (Djankov, 2017) or international taxation competition caused by globalization (Naseif et al., 2019). Pursuant to the provisions of the international agreements CRS MCAA and CBC MCAA, the Russian Federation began participating in the information exchange in 2018. To activate the automatic tax information exchange with other member countries of the CRS MCAA and CBC MCAA, the Russian Federation took another step, which was as important as the signing of the agreements. The Russian Federation incorporated provisions of the agreements and the CRS into its national legislation, adopting new acts and amending some existing ones. Federal law No. 340-FZ (November 27, 2017) provides a mechanism that the Russian tax administration must use to collect the information necessary for exchange with the competent authorities of other countries in accordance with multilateral agreements (Russian Federation, 2017). The key document among them is the Order of the Government of the Russian Federation “On realizing automatic international exchange of financial information with competent authorities of foreign states (Territories)” (June 16, 2018 No. 693). The text of this Order is basically a Russian translation of the CRS, slightly abridged but with its key provisions intact. Federal law “On currency regulations and currency control” (December 10, 2003 No. 173-FZ) was significantly amended in 2019 and 2020—in particular, it introduced new regulations related to transactions involving accounts opened by Russia’s tax residents outside the country. The conceptual framework of the currency legislation was supplemented with such terms as “a financial institution” and “a financial asset.” These legislative novelties are a good example of the trend to adapt national financial regulatory frameworks to the requirements of the CRS MCAA. The changes should adapt the Russian currency legislation as much as possible to the requirements of the CRS, which has pointed to a new direction for the development of financial legislation across the globe. Federal law “On currency regulations and currency control” (December 10, 2003 No. 173-FZ) (Currency Law) defines financial institutions as banks and other financial organizations that, according to their foundational documents, may provide services such as opening financial and other accounts for residents for keeping, managing, investing, or effecting other transactions with account holders’ cash and other financial assets for their benefit or directly or indirectly at their expense (Russian Federation, 2003).

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The CRS provides this definition of “financial institution” as: “A Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company” (OECD, 2017b) and describes each of the mentioned types of organization. Unlike Russian law, international law refers to financial institutions only those insurance companies that offer endowment or investment insurance policies and annuity contracts. The Currency Regulations Law does not contain a definition of “financial assets.” From the text of the law, one can infer that financial assets are cash (foreign and Russian currencies) and other financial assets. Federal law No. 340-FZ (November 27, 2017) defines financial assets as follows: cash, securities, financial derivatives, shares of the authorized capital of a corporate entity or shares in foreign firms unincorporated in the Russian Federation, the right of recourse on an insurance policy, as well as any financial instruments linked to the financial assets mentioned above (Djankov, 2017). Apparently, the currency legislation interprets “financial assets” differently than the laws governing businesses’ operations largely because of the close connection between financial assets and accounts at financial institutions on whose books they are recorded (Matytsin, 2021). In keeping with the norms of the CRS, the term “financial assets” is: “security, partnership interest, commodity, swap, insurance contract or annuity contract, or any interest (including a futures or forward contract or option) in a security, partnership interest, commodity, swap, insurance contract, or annuity contract” (Oats & Tuck, 2019). The Russian and international financial laws also differ in that in international law, the lists of financial institutions and financial assets, albeit very wide, are exhaustive. The latest amendments to the Russian currency legislation filled in certain gaps in the requirements concerning reports that Russia’s tax residents must file to account for their other financial assets (non-cash assets) that are on the books of financial institutions outside the RF. For a long time, the law applied only to cash accounts held in foreign currencies or the Russian currency, whereas the law had nothing to say about non-cash accounts, including securities accounts. The currency control organs tried to fill in this gap by issuing official explanations, which sometimes contradicted each other. The latest amendments to the Currency law were caused primarily by the necessity to incorporate the CRS requirements into the Russian legislation. It is in the currency control agency’s best interests to ensure that residents submit information about their financial accounts in other jurisdictions in a format similar to the one in which reports received by the tax administration are filed in accordance with the CRS MCAA: this uniformity simplifies the handling of the information. On the one hand, the area where the currency legislation is applied has been significantly expanded lately, which indicates that the screws have been

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tightened in this field. On the other hand, the rights and obligations of the parties are being streamlined. There is a noteworthy departure from the recent trend of gradual easing of the currency restrictions in the Russian Federation. The list of permitted reasons for crediting funds to residents’ accounts at foreign banks had been expanding for a long time. In 2019, Russian authorities abolished restrictions on crediting funds received from non-residents to accounts held at banks in foreign states recognized by members of the Eurasian Economic Union and in foreign countries that exchange information with the Russian Federation according to the CRS MCAA or other international agreements.

4

Conclusion

By way of a conclusion, it should be mentioned that the international tax transparency network provides the tax administrations of participating countries with a great opportunity to combat tax evasion committed through cross-border financial transactions. When the Russian Federation secured, through the automatic international exchange, access to information about accounts of Russia’s tax residents at foreign financial institutions, its mode of tax control shifted from selective to the blanket. As a result, Russia has begun massively applying financial law norms unprecedented in its legal history, regulating tax liabilities and currency transactions of owners of assets located outside the Russian Federation, and this new reality is sure to highlight problematic aspects of the relevant regulatory framework. These aspects include, inter alia, excessive complexity of individuals’ procedural obligations, insufficient justification for many currency restrictions, the restrictions on the free use of foreign accounts, and inconsistencies and gaps in the terminology used in the currency legislation. The introduction of such terms as “financial institution” and “financial asset” into Russia’s legislation is an important step in adapting its laws to the norms of international law in general and the CRS MCAA in particular. Because of certain peculiarities these terms have in Russia—for instance, the lists of legal constructs subsumed under these headings are non-exhaustive—it is very important to continue improving the conceptual framework of financial law and streamlining law enforcement. Acknowledgments This work was financially supported by Grant from the President of the Russian Federation NSh-3270.2022.2 “Evolution or revolution of civil justice: Digitalization through the prism of artificial intelligence.”

References Djankov, S. (2017). United States is outlier in tax trends in advanced and large emerging economies. Policy Brief. Peterson Institute for International Economics. Retrieved from https://www.piie.com/ system/files/documents/pb17-29.pdf. Accessed 16 Jan 2022 Frolova, E. E., & Tsepova, E. A. (2021). Prospects for reforming approaches to the legal status of a Russian resident individual. State and Law, 6, 158–172. https://doi.org/10.31857/ S102694520015038-2 International Monetary Fund (IMF). (2021). World economic outlook database, October 2021 Edition. Retrieved from https://www.imf. org/en/Publications/WEO/weo-database/2021/October/select-coun try-group. Accessed 16 Jan 2022. Levashenko, A. D., & Koval, A. A. (2018). International automatic exchange of tax information: How it works. Russian Economic Development, 25(3), 71–73. Matytsin, D. E. (2021). Retail financing of investments by means of remote digital computer algorithm. Legal Concept, 20(2), 150–158. https://doi.org/10.15688/lc.jvolsu.2021.2.20 Meyer, R. A. (2013). Tax transparency. Business Horizons, 56(2013), 543–549. Morten, B., & Zeume, S. (2018). Corporate tax havens and transparency. The Review of Financial Studies, 31(4), 1221–1264. Retrieved from https://www.jstor.org/stable/48616678. Accessed 17 Jan 2022 Naseif, A. H., Hasan, S. I., Malik, Y. S., Talab, H. R., & Hussein, N. A. (2019). A theoretical review on global trends of company income taxes and alternatives of tax reforms. Account and Financial Management Journal, 4, 1883–1895. Oats, L., & Tuck, P. (2019). Corporate tax avoidance: Is tax transparency the solution? Accounting and Business Research, 49(5), 565–583. https://doi.org/10.1080/00014788.2019.1611726 OECD. (1988). Convention on mutual administrative assistance in tax matters. Retrieved from http://www.oecd.org/ctp/exchange-of-taxinformation/convention-on-mutual-administrative-assistance-in-taxmatters.htm. Accessed 17 Jan 2022. OECD. (2013). Action plan on base erosion and profit shifting. https:// doi.org/10.1787/9789264202719-en OECD. (2014). Multilateral competent authority agreement on automatic exchange of financial account information. Retrieved from https://www.oecd.org/tax/automatic-exchange/international-frame work-for-the-crs/multilateral-competent-authority-agreement.pdf. Accessed 22 Jan 2022. OECD. (2016a). Tax transparency 2016 report on progress. Retrieved from http://www.oecd.org/tax/transparency/GF-annual-report-2016. pdf. Accessed 17 Jan 2022. OECD. (2016b). Multilateral competent authority agreement on the exchange of country-by-country reports. Retrieved from https:// www.oecd.org/tax/automatic-exchange/about-automatic-exchange/ cbc-mcaa.pdf. Accessed 16 Jan 2022. OECD. (2017a). Brief on the state of play on the international tax transparency standards September 2017. Retrieved from http:// www.oecd.org/tax/transparency/brief-and-FAQ-on-progress-on-taxtransparency.pdf. Accessed 17 Jan 2022. OECD. (2017b). Standard for automatic exchange of financial account information in tax matters (2nd ed.). Retrieved from https://www. oecd-ilibrary.org/taxation/standard-for-automatic-exchange-of-finan cial-account-information-in-tax-matters-second-edition_ 9789264267992-en;jsessionid=IW0_TZBRjv88sDJiI20E2i1C.ip10-240-5-179. Accessed 17 Jan 2022. OECD. (2021). List of CRS MCAA signatories. Retrieved from http:// www.oecd.org/tax/automatic-exchange/international-frameworkfor-the-crs/MCAA-Signatories.pdf. Accessed 17 Jan 2022.

International Tax Transparency: Incorporating the Provisions of International. . . OECD. (2022). Convention on mutual administrative assistance in tax matters, chart of participating jurisdictions. Retrieved from http:// www.oecd.org/tax/exchange-of-tax-information/Status_of_conven tion.pdf. Accessed 17 Jan 2022. Owens, J. (2015). Tax transparency and BEPS. Journal of Tax Administration, 1(2), 1–10. Retrieved from http://jota.website/index.php/ JoTA/article/view/36/38. Accessed 16 Jan 2022 Pistone, P. (2014). Coordinating the actions of regional and global players during the shift from bilateralism to multilateralism in international tax law. World Tax Journal, 6(1), 3–9. Retrieved from https://edisciplinas.usp.br/pluginfile.php/311949/mod_resource/con tent/1/Pasquale%20Pistone.pdf. Accessed 16 Jan 2022 Russian Federation. (2003). Federal law “On currency exchange regulation and currency exchange control” (December 10, 2003 No. 173).

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Moscow, Russia. Retrieved from http://www.consultant.ru/docu ment/cons_doc_LAW_45458/. Accessed 17 Jan 2022. Russian Federation. (2017). Federal law “On amendments to part one of the Tax Code of the Russian Federation in connection with the implementation of the international automatic exchange of information and documentation for international groups of companies” (November 27, 2017 No. 340). Moscow, Russia. Retrieved from http://www.consultant.ru/document/cons_doc_LAW_283498/. Accessed 17 Jan 2022. Tarakanov, V. V., Inshakova, A. O., & Dolinskaya, V. V. (2019). Information society, digital economy and law. In E. Popkova (Ed.), Ubiquitous computing and the internet of things: Prerequisites for the development of ICT (pp. 3–15). Springer. https://doi.org/10. 1007/978-3-030-13397-9_1

Characterization of the Current State of Central Bank Digital Currencies from a Global Perspective Maria V. Shildina

Abstract

Keywords

The paper examines the use of the new concept of central bank digital currency in global circles. The author substantiates that the global community is trying to find an alternative to cash and non-cash forms of money due to the growth of processes associated with digitalization. Historically, the use and implementation of new technologies have determined the transformation of the monetary sector. Thus, the emergence and growing use of cryptocurrencies, coupled with the rapid development of information technologies, payment systems, digital networks, and increased volumes of trade via the Internet, have driven the demand for the emergence of peer-to-peer digital transactions. Central banks have raised concerns about the widespread use of cryptocurrencies based on a distributed ledger of transaction information not always sanctioned by states, including increased issuance of privately stabilized cryptocurrencies. Therefore, regulators actively seek a means of financial inclusion for the general public and a means by which financial services can be facilitated globally. The paper aims to provide an insight into the basics of a central bank digital national currency, formulating its definition. The author used general scientific methods of knowledge: dialectical, generalization, induction, deduction, analysis, synthesis, and others. The author established that the introduction of digital currency by central banks would not affect the essence of the official monetary units already existing in countries. If the central bank of a given country, which has the power to issue digital currency, issues one, this will mean that it has issued its obligation in digital form, which is expressed in the official monetary unit along with its other monetary obligations (banknotes, coins, etc.). The paper substantiates and articulates the concept of central bank digital currency.

Central bank digital currency · Blockchain · Cryptocurrency · Cryptoassets · CBDC

M. V. Shildina (✉) Plekhanov Russian University of Economics, Moscow, Russia

JEL Codes

K0 · K11 · K12 · K15 · K20 · K22

1

Introduction

The new objective reality of social relations, driven by the global digitalization trend, has provoked central banks in various countries to discuss and determine the possibility of introducing a central bank digital currency that would be issued by the country and have the features of cash or deposits. The catalyst for such a significant monetary change is the active circulation of cryptocurrencies (Niepelt, 2019) and related plans by large private companies to launch a global private digital currency. State regulators are concerned about the shifting pole of state monetary regulation and the absence of state control over the rapid development of cryptocurrencies based on a distributed ledger of information storage. The decentralized storage of cryptocurrency and its popularity among the broader civilian population have provoked concerns from central banks, regulatory and supervisory bodies, and legislators. There is a view that the emergence of “stable coins” (asset-backed digital tokens), broadly speaking, could affect banks’ credibility as money issuers. The development of state concepts to adopt central banks’ digital currencies is a response to the use of cryptocurrencies by various countries and the issuance of private digital currencies, and other technological developments in the financial and legal sectors. Countries cannot allow broad

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_105

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alternatives in the choice of legitimate means of payment, nor can they diminish the trust that citizens have in it (Smith, 1981). Additionally, the introduction of a central bank digital currency raises several significant legal issues. For example, whether a central bank digital currency should be a legal tender, whether central banks have the authority to issue digital currency, whether digital currency settlement will be final, and when the moment of performance will occur in cases of settlement using the digital national currency. This list of questions relating to the functioning of digital currency is not exhaustive. There is no doubt that the decision to issue digital currency by a central bank must have a severe legal basis capable of answering the questions arising in private and public law. This has contributed to the relevance and novelty of this research, a topic that has not been explored enough in the legal literature. This research aims to describe the current state of central bank digital currencies and formulate a definition of a central bank digital national currency.

2

Materials and Methods

The legal and economic literature has studied only some aspects of the legal relations related to digital national currencies. Among the scholars in the field of the stated topic, in general, and money flow in particular, it is necessary to highlight Bindseil et al. (2022); Boar et al. (2020); Bordo (2021); Bossu et al. (2020); Frolova (2010); Gabov (2021); Kudrevich and Tarasov (2021); Mancini-Griffoli et al. (2018); Niepelt (2019); Rusakova et al. (2020); Smith (1981); Svechnikova and Shildina (2021); Zaharov et al. (2021). Despite a considerable number of publications on related topics, the prospects for central banks’ digital national currencies have not been sufficiently explored and addressed in contemporary legal scholarship. The author applies the following cognitive methods: dialectical, generalization, induction, deduction, analysis, synthesis, and others.

3

Results

3.1

Cryptocurrency

Cryptocurrency can be classified as anti-fiat money. Its issuance is based on a distributed registry of transaction information called the blockchain. Cryptocurrency has gained popularity due to the weakening of state control, which has allowed cryptocurrencies to spread to underground markets.

Cryptocurrency transactions are explicitly banned in many countries. From an investment perspective, cryptocurrency is a high-risk asset, particularly for savings and settlements, due to its high level of volatility. In this regard, there is a consensus of opinion that cryptocurrency cannot perform the classical functions of money, i.e., being a means of payment, an accounting unit, and a means of accumulation.

3.2

Stable Coins

Stable coins are a digital token that is secured by assets. In this case, the token is a universal medium of exchange for domestic and international payments. The assets backing the token can be securities as well as bank deposits, which can be denominated both in the currency of one country and in different countries. One can agree with the conclusions of the German author Dirk Niepelt that if stable coins are backed by securities that are denominated in the currency of one country, then, by their legal nature, such stable coins will constitute rights of claim against the central bank of that country (Mancini-Griffoli et al., 2018). Many stable coins offer the user a guarantee of redemption at face value. For example, if a coin is purchased for 100 conventional units, it can also be exchanged back for 100 conventional units. However, this exchange algorithm is not backed by government support. It is created exclusively by private issuers of stable coins. Additionally, the technology behind the flow of stable coins is also decentralized and based on a blockchain model.

3.3

Central Bank Digital Currency: Key Issues

More than 80% of central bank respondents to the 2019 Bank for International Settlements survey responded positively to the question about central bank participation in digital currency projects (Boar et al., 2020). Many countries are currently analyzing models for central bank issuance of digital currencies. Foreign researchers note that this will be a new type of fiat money that will expand digital access to central bank reserves (Kudrevich & Tarasov, 2021).

A Brief Historical Perspective on Monetary Transformation Money evolved together with human history and had to meet the requirements of an effective, convenient, and recognized by all participants in the commodity turnover means of payment. E. E. Frolova has rightly noted that “the emergence of a universal equivalent at a certain stage of socioproductive evolution became a stimulant for the further development of human society” (Frolova, 2010).

Characterization of the Current State of Central Bank Digital Currencies from a. . .

The development of central banks in the seventeenth to twentieth centuries was driven by the following needs: financing wars, establishing an efficient payment system and regulating price stability (Bordo, 2021). In the eighteenth and nineteenth centuries, the development of financial technology led to the appearance of fiat money (convertible banknotes), which, in turn, reduced the cost of money (Smith, 1981). The result of the banknotes’ issuance was an establishment of states’ monopoly (by central banks) on the money release process. Translating the projection into a national banks’ digital currency, the latter should be the next round in the development of fiat money.

Factors Determining States’ Adoption of a Central Bank Digital Currency The central bank digital currency is expected to act as an additional “form” of money, a kind of electronic version of the national currency, cash; hence, the central bank digital currency will be fiat money. It has been noted that the use of cash has reduced in several countries with digitalization (e.g., Norway and Sweden) (Bordo, 2021). In this context, regulators try to create a central bank digital currencies architecture so that it has all the features of cash, excluding the anonymity of payments. Central banks’ digital currencies would be a response to large corporations threatening the government’s monetary independence. For example, if Facebook were to issue its own stable coins, this could significantly impact states’ monetary policy because Facebook’s stable coins could be used by every registered network user, which presumably constitutes one in four of the world’s population. In this case, as monetary policy regulators, central banks should supervise and initiate a legislative agenda to issue such a digital asset. Another factor determining states’ adoption of central bank digital currency may be the fact that such digital currency should act as a medium of exchange, payment, and savings, i.e., have all the attributes of a legal tender (Inshakova et al., 2019). In this case, central banks and, correspondingly, states should ensure that the use of digital currency is secure against hacking, fraud, and money laundering. Central Bank Digital Currency: Terms and Definitions Central bank digital currency (CBDC) is the global name for the central bank digital currency. However, the term CBDC has not been coined so far. It used to refer to some concepts, but CBDC is believed to be a central bank commitment expressed in a particular unit of account that serves as a

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medium of exchange and a means of value accumulation. There is no denying that this topic involves a conflation of “economic views of money and legal concepts.” There is a debate among legal scholars about the legal correctness of the phrase “form of money” in the context of dialogue concerning central banks’ digital national currencies. For example, Kudrevich, and Tarasov (2021), Zaharov et al. (2021) consider digital currency as the third form of currency and a new form of money. We believe that this issue should be based on the legislation of each particular country, the rules of which should operate with the concept of “form of money.” We believe that the form means the banknote, while digital is a way of recording and a mechanism for the circulation and transmission of information, the presentation of claims, and the fulfillment of obligations.

Can Central Bank Digital Currency Qualify as Electronic Money? In some jurisdictions, the concept of “electronic money” has found its legislative expression. In this regard, the answer to the mentioned question will depend on the legal order of each particular country. For example, in most jurisdictions, e-money does not have the status of a legal tender. Legislative systems in individual countries provide that the issuer of e-money can be a private institution licensed to provide a specific payment service (State Bank of Pakistan, 2019). The EU Directive practically excludes the issuance of e-money by the Central Bank (European Parliament and of the Council of the European Union, 2009). E-money is generally defined as the electronically stored monetary value represented by a claim on the issuer, which is issued when funds are received for the purpose of payment transactions (Financial Conduct Authority (FCA), n.d.) and is accepted by persons or entities other than the issuer. The legal nature of central bank digital currency is thus different from the legal nature of “electronic money.” Central Bank Digital Currency and Its Relationship to Currency, Money, and Legal Tender As part of the discussion on whether digital currency by central banks is a new official monetary unit or a new official payment method, let us propose an analysis of these concepts and try to answer this question. By law, any country has its official monetary unit and the official means of payment in force in its territory. Accordingly, a monetary obligation is an obligation to pay a certain amount of money, which must be expressed in the official monetary unit. Monetary units are strictly regulated by the laws of each country, and countries’ legal orders prohibit the introduction of other currencies and the issue of money surrogates on their territories. It means that the official monetary units of

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countries must be distinct from the so-called unofficial, quasi-monetary units (such as cryptocurrency). Additionally, countries’ monetary laws are free to establish the denomination value of their official monetary units. The state currency is defined as the official means of payment, strictly established in its legislation. Thus, the status of currency is assigned to money issued by the central bank. Currency is always expressed in the official monetary unit of a particular country. The key attribute of currency is that it has the status of a legal tender. In turn, this entitles the debtor to fulfill a monetary obligation to the creditor by offering currency as repayment of the debt. Money is commonly thought of as banknotes and coins issued by the central bank. There is no universally accepted concept of money in legal doctrine. Although “electronic money” exists in some jurisdictions, which is a legal tender and classified as a type of money. Central banks are official monopolists with the function of issuing their country’s currency. The main characteristic of currency as a legal tender is the right granted by the legislator to discharge monetary obligations in currency. In other words, a debtor, under a monetary obligation, legally discharges his obligation to repay the debt by handing over to the creditor a means of payment that has the status of a legal tender. Of course, the rule of a legal tender is valid if the law allows it and if there is no special contractual provision between the parties to the transaction that stipulates otherwise. Thus, if the parties to the contract under which the monetary obligation is established have not specifically agreed on another currency of payment, and if the law permits it, the debtor always has the option to pay by a legal tender. Simultaneously, the issue of defining a legal tender is part of public policy because there are countries that have a foreign tender as a legal tender. As an example, section 19 of the “Central Bank of Liberia” Act provides that: “The Liberian dollar is the currency of Liberia and legal tender” and “The currency of the United States of America is a legal tender in Liberia.” Thus, not all payment instruments with the status of a legal tender can be named currency. Some countries have conferred a legal tender status on cheques issued by commercial banks. For example, according to the Belgian Royal Decree “On Encouragement of Book Cash” (November 10, 1967 No. 56), a seller cannot refuse a buyer if the latter presents a cheque of an amount not exceeding 250 € as a tender. Also, some banknotes may be used as currency even though they do not have the status of a legal tender. Today, this is fully applicable to banknotes in Scotland and Northern Ireland, issued by private banks (Bossu et al., 2020). It should be noted that, according to some foreign researchers seeking the legal nature of payment instruments (Bossu et al., 2020), the currency is not the only payment

M. V. Shildina

instrument used in settlements by participants of civil turnover. It is noted that bills of exchange and cheques are also widely used in settlement legal relations. Concerning central bank digital national currency and the possibility of granting it a legal tender status, a perfectly reasonable and fair question arises: “Does the sovereign have an unlimited right to a grant legal tender status to a means of payment by its legal acts?” To answer this question, let us assume that it is appropriate to grant a legal tender when the payment instrument is easily accessible to the maximum number of people living in the territory of a particular country. The implication is that it is also legally possible to grant a legal tender status to means of payment that the majority of the population cannot obtain and use. However, this question lies in the domestic and foreign policy of the country. It should be noted that the Riksbank (Central Bank of Sweden), in the context of the reduction of cash turnover in the country, and the resulting risk of their refusal to be accepted by participants in civil turnover, has discussed that the so-called “cashless society” and the broad masses of people who do not have access to any form of money issued by the Central Bank can significantly hinder the development of an effective payment system in Sweden. For this circumstance, it is proposed to base the concept of the “e-crown” (the digital currency of the Swedish central bank) on technological neutrality, which means the possibility, in the case of a self-issued electronic payment instrument, to become a legal tender. It is noted that the possible consequences of such a legislative maneuver should be assessed, and the possibilities of access to digital and financial resources by older people, physically impaired people, people without access to digital means of communication, etc., should be considered, too (Sveriges Riksbank, 2019). Thus, central bank digital currency is not likely to become a new monetary unit, contrary to its description as a new form of money. The introduction of digital currency by central banks will not affect the substance of the official monetary units already existing in countries. If the Central Bank of a particular country, which has the power to issue digital currency, issues one, it will mean that it has issued its obligation in digital form, which is expressed in the official monetary unit along with its other monetary obligations (banknotes, coins, etc.) (Matytsin, 2022). Given the above, it can be concluded that the central bank will act as a guarantor of convertibility at the face value of the central bank digital currency into other monetary liabilities of the central bank, such as banknotes, coins, etc. Let us formulate the definition of a central bank digital currency. A central bank digital currency is a digital liability of the state central bank, expressed in digital form, equal to an exchange rate of 1 to 1 against the national currency, issued

Characterization of the Current State of Central Bank Digital Currencies from a. . .

and secured by the central bank, stored and operated on a special digital platform, which is a legal tender.

4

Conclusion

The new objective reality of social relations, driven by the trend of global digitalization, has triggered the need for central banks to find a digital means of financial accessibility for the general public. Giving central banks’ digital currency the functions inherent in money will serve as a stimulus vector for the digital development of monetary circulation. Given the lack of a unified definition of central bank digital currency, the paper formulates and proposes the concept of central bank digital currency. From the point of practical application, the allocation of the independent concept of central bank digital currency is conditioned by the goals of searching for differences and common patterns and elaboration of approaches to understanding the nature of central bank digital currency. Not only the legal nature of central bank digital currency but also issues related to the finality of payment, the moment of fulfillment of a monetary obligation in settlements with central bank digital currency, and the relationship of central bank digital currency to non-cash settlements are subject to reflection and elaboration. Acknowledgements The research was carried out with the financial support of the Grant of the President of the Russian Federation No. HШ3270.2022.2 “Evolution or revolution of civil proceedings: digitalization through the prism of artificial intelligence”.

References Bindseil, U., Papsdorf, P., & Schaaf, J. (2022, January 7). The Bitcoin challenge: How to tame a digital predator. VOXeu-CERP. Retrieved https://voxeu.org/article/bitcoin-challenge. Accessed from 19 Jan 2022. Boar, C., Holden, H., &Wadsworth, A. (2020). Impending arrival—A sequel to the survey on central bank digital currency. BIS Publication No. 107. Retrieved from https://www.bis.org/publ/bppdf/ bispap107.pdf. Accessed 20 Jan 2022. Bordo, M. (2021, October 19). Central bank digital currency in an historical perspective. VOXeu-CERP. Retrieved from https:// voxeu.org/article/central-bank-digital-currency-historical-perspec tive. Accessed 20 Jan 2022. Bossu, W., Itatani, M., Margulis, C, Rossi, A. D. P., Weenink, H., & Yoshinaga, A. (2020). Legal aspects of central bank digital currency: Central bank and monetary law considerations (IMF Working Papers No. 254). https://doi.org/10.5089/9781513561622.001 European Parliament and of the Council of the European Union. (2009). Directive 2009/110/EC “On the taking up, pursuit and prudential supervision of the business of electronic money institutions”

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(September 16, 2009, amending Directives 2005/60/EC and 2006/ 48/EC and repealing Directive 2000/46/EC). Brussels, Belgium. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri= CELEX:32009L0110&from=EN. Accessed 7 Feb 2022. Financial Conduct Authority (FCA). (n.d.). The FCA’s role under the Electronic Money Regulations 2011 (the EMRs). Retrieved from https://www.fca.org.uk/firms/payment-services-regulations-emoney-regulations. Accessed 7 Feb 2022. Frolova, E. E. (2010). Monetary circulation as an object of state regulation. Gaps in Russian Legislation, 4, 313–315. Retrieved from https://cyberleninka.ru/article/n/11-3-denezhnoe-obraschenie-kakobekt-gosudarstvennogo-regulirovaniya. Accessed 18 Jan 2022. Gabov, A. V. (2021). A digital ruble of the central bank as a civil rights object. Actual Problems of Russian Law, 16(4), 55–65. https://doi. org/10.17803/1994-1471.2021.125.4.055-065 Inshakova, A. O., Goncharova, M. V., Makarenko, T. D., & Goncharov, A. I. (2019). Conversion of cashless money into banknotes as a type of economic crime. Russian Journal of Criminology, 13(4), 595–603. https://doi.org/10.17150/2500-4255.2019.13(4).595-603 Kudrevich, V. V., & Tarasov, V. A. (2021). Modern form of Russian currency—Digital ruble. International Journal of Humanities and Natural Sciences, 7(58), 128–130. https://doi.org/10.24412/25001000-2021-7-128-130 Mancini-Griffoli, T., Martinez Peria, M. S., Agur, I., Ari, A., Kiff, J., Popescu, A., & Rochon, C. (2018). Casting light on central bank digital currencies. IMF Staff Discussion Notes No. 18/08. Retrieved from https://www.imf.org/en/Publications/Staff-Discussion-Notes/ Issues/2018/11/13/Casting-Light-on-Central-Bank-DigitalCurrencies-46233. Accessed 21 Jan 2022. Matytsin, D. E. (2022). Digital technologies of the Bank of Russia for regulating investment relations. In A. O. Inshakova & E. E. Frolova (Eds.), Smart technologies for the digitisation of industry: Entrepreneurial environment (pp. 227–240). Springer. https://doi.org/10. 1007/978-981-16-4621-8_19 Niepelt, D. (2019, September 12). Libra paves the way for central bank digital currency. VOXeu-CERP. Retrieved from https://voxeu.org/ article/libra-paves-way-central-bank-digital-currency. Accessed 19 Jan 2022. Rusakova, E. P., Frolova, E. E., & Gorbacheva, A. I. (2020). Digital rights as a new object of civil rights: Issues of substantive and procedural law. In E. Popkova & B. Sergi (Eds.), Artificial intelligence: Anthropogenic nature vs. social origin (pp. 665–673). Springer. https://doi.org/10.1007/978-3-030-39319-9_74 Smith, A. (1981). An inquiry into the nature of causes of the wealth of nations. Liberty Fund. State Bank of Pakistan. (2019). Regulations for electronic money institutions. Retrieved from https://www.sbp.org.pk/psd/2019/C1. htm. Accessed 7 Feb 2022. Svechnikova, N. V., & Shildina, M. V. (2021). Digital ruble: Theory and prospects of legal regulation. Economy. Law. Society, 6(3), 60–67. https://doi.org/10.21686/2411-118X-2021-3-54-60 Sveriges Riksbank. (2019, April 29). The Riksbank proposes a review of the concept of legal tender. Retrieved from https://www.riksbank.se/ en-gb/press-and-published/notices-and-press-releases/pressreleases/2019/the-riksbank-proposes-a-review-of-the-concept-oflegal-tender/. Accessed 21 Jan 2022. Zaharov, A. V., Zubanova, A. E., Novikov, S. V., Ryabinina, N. I., Trubin, A. E., Trubina, I. O., & Shilenok, A. O. (2021). Digital Ruble as the third form of money in Russia. Information Systems and Technologies, 3(125), 25–34.

Tax Regulation in Special Economic Zones of the Russian Federation in the Context of Sanction Restrictions Irina V. Gashenko Levandovskii

, Yulia S. Zima

, Maria N. Kilevnik

, and Sergei Yu.

Abstract

Keywords

The paper aims to study the current practice of tax regulation in special economic zones of the Russian Federation and develop recommendations for improving this practice in the conditions of sanction restrictions. To assess the competitiveness of special economic zones of the Russian Federation, the comparative analysis method compares the taxation conditions in Russia with other CIS countries in 2021. To determine the role of taxation in the development of special economic zones in Russia, the authors applied the method of correlation analysis. This method is used to determine the relationship between the tax climate in Russia and the parameters of special economic zones in Russia. The method of trend analysis is applied to study the dynamics of changes in these parameters in 2014–2020. The contribution of the research to the literature consists in clarifying the features and prospects for improving tax regulation in special economic zones of the Russian Federation under the conditions of sanction restrictions. The practical significance of the research lies in the fact that the proposed recommendations will make it possible to fully disclose the potential generation of special economic zones of anti-crisis effect under sanction restrictions and will be useful in practice to ensure the stability of the Russian economy under sanctions.

Tax regulation · Special economic zones of the Russian Federation · Sanction restrictions · Taxation · Incentives · Government support · Sanctioned development in special economic zones

I. V. Gashenko (✉) · Y. S. Zima Rostov State University of Economics, Rostov-on-Don, Russia M. N. Kilevnik Rostov State University of Economics, Rostov-on-Don, Russia Interdistrict Inspectorate of the Federal Tax Service of Russia No. 26 on Rostov Region, Rostov-on-Don, Russia S. Y. Levandovskii Rostov State University of Economics, Rostov-on-Don, Russia Department of Field Tax Inspections No. 1 of the Federal Tax Service of Russia in Leninsky District, Rostov-on-Don, Russia

JEL Codes

E62 · F12 · F38 · H12 · G01 · H21 · H25 · H32 · H71 · R12

1

Introduction

Special economic zones (SEZs) are designated areas with unique (most favorable compared to the rest of the country) conditions for investment and business activities, designed to support the socio-economic, innovative, and technological development of the regions in which they are created or priority sectors of the economy (Buaban et al., 2021; Li et al., 2021; Wu et al., 2021). According to the Association for the Development of Clusters, Technology Parks and SEZ of Russia (Association for the Development of Clusters, Technology Parks and SEZ of Russia, 2021), in 2021, there were 42 special economic zones in Russia: 23 SEZs for industrial-production type, 10 SEZs for touristic and recreational type, 7 SEZs for technology-innovative type, and 2 SEZs of port type. In these special economic zones, there are 931 residents (including 146 with foreign participation, 42 countries-investors) who created 48,025 jobs. The total volume of private investment by residents was 632.2 billion rubles; the volume of foreign investment equaled 284.3 billion rubles (45%). On the one hand, sanction restrictions cause an increased need to activate mechanisms of socio-economic development in Russia, among which an important place belongs to SEZ. On the other hand, sanction restrictions complicate foreign

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_106

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participation in SEZs of Russia and reduce the investment attractiveness of these zones. In this regard, an urgent scientific and practical problem lies in the resolution of the contradiction between the increased importance of special economic zones and reduced opportunities for their development in Russia. Taxation is one of the key factors in unlocking the potential of SEZs. Therefore, it is related to the prospects for the regulation of SEZs in Russia in the context of sanction restrictions. The paper aims to study the current practice of tax regulation in SEZs of the Russian Federation and develop recommendations for improving this practice under the conditions of sanction restrictions.

2

Technology Parks and SEZ of Russia (2021), the authors compared the conditions of taxation of SEZs in Russia with other CIS countries in 2021 using comparative analysis. The method of expert evaluation was applied to determine the competitiveness of SEZs in Russia. The authors applied the method of correlation analysis to determine the role of taxation in the development of SEZs in Russia. Using this method, based on World Bank statistics (World Bank, 2022), the authors determine the relationship between the tax climate (paying taxes) in Russia and the parameters of SEZs in Russia: the number of residents, jobs created, residents’ revenues, and labor productivity. The method of trend analysis is also applied to study the dynamics of changes in these parameters in 2014–2020.

Literature Review 4

The available literature elaborates the concept of SEZ, the attractiveness of which for private (including foreign) investors is associated with improved infrastructure, a more loyal organization and administration by public authorities, and most importantly, preferential conditions of taxation (and customs regulation). The theory and practice of tax regulation of SEZs are revealed in the works of Buaban et al. (2021); Chaisse and Ji (2020); Frick and Rodríguez-Pose (2022); Kong (2022); Liu et al. (2022). The features of special economic zones in Russia are disclosed in the works of Bakaeva et al. (2021); Gashenko and Zima (2019); Gashenko et al. (2019); Popkova et al. (2019); Zhuravleva and Bogatyrev (2019). Sanction restrictions form a special model of capitalism that flexibly combines features of free trade and protectionism. The market mechanism under sanction restrictions is distorted because freedom of competition is distorted (Farmahini Farahani et al., 2022). This opens up expanded opportunities for state intervention in market processes (Iriarte Angel et al., 2022). Because the discussed restrictions take the economy out of balance, their essence reliably reflects the concepts of the sanction crisis, which began in Russia in 2014 and escalated in 2022. The conducted literature review showed that, despite the high degree of elaboration of the issues of taxation of SEZs and the sanction crisis, the problem of tax regulation in SEZs of the Russian Federation in conditions of sanction restrictions is underdeveloped and needs additional research. Filling the gap identified is the subject of this research.

3

Materials and Methods

During the study of current practices of tax regulation in SEZs of the Russian Federation, the authors assessed the competitiveness of SEZ of Russia from the standpoint of tax climate in 2021. For this purpose, based on the materials of the Association for the Development of Clusters,

Results

To determine the competitiveness of the tax climate of SEZs in Russia, their taxation conditions were compared with conditions in other CIS countries in 2021 (Table 1). Table 1 shows that SEZs in Russia provide benefits for almost all taxes (except personal income tax). It should be noted that many taxes are not reduced to zero rates (as in other CIS countries), but the benefit is provided. Nevertheless, the volume of investments in SEZs in Russia (632.2 billion rubles) is higher than in other CIS countries. It can be noticed that the difference between the tax climate in Uzbekistan and Belarus consists only in the presence of a zero rate of personal income tax in Uzbekistan, which may be one of the reasons why the volume of investments in its special economic zones ($8.5 billion) is 13.3% higher than in the Belarusian ones ($7.5 billion). Based on the results of the comparative analysis, an expert assessment of the competitiveness of SEZs of the Russian Federation from the standpoint of tax climate in 2021 on a ten-point scale was made (Fig. 1). Figure 1 shows the prospects for improving the competitiveness of SEZs in Russia from the perspective of the tax climate in 2021: • In the aspect of profit tax with the transition from tax benefits to zero rates • In the aspect of VAT with the introduction of zero rates for all SEZs • In the aspect of excise with the introduction of zero rates • In the aspect of tax on property of organizations and land tax with the introduction of indefinite zero rates • In the aspect of customs benefits with the introduction of export benefits and foreign workers’ wages To determine the role of taxation in the development of special economic zones in Russia, let us turn to the results of the trend and correlation analysis (Table 2).

Tax Regulation in Special Economic Zones of the Russian Federation in the Context of. . .

605

Table 1 Comparative analysis of taxation conditions of SEZs in Russia with other CIS countries in 2021 Tax/levy Profit tax Personal income tax VAT

Tajikistan 0% – 0%

Azerbaijan 0% – 0%

Uzbekistana 0% 0% –

Belarus 0% – –

Excise tax

–

0%

–

–

Tax on real estate (property of organizations) Land tax

0%

0%

0%

0%

0%

0%

0%

0%

Vehicle tax (transport tax)

0

0%

–

–

Customs benefits

For exports, imports, and wages of foreign workers 0.186

Import benefit

Benefits for import and export $8.5 billion

Benefits for import and export $7.5 billion

The volume of investment in the ECO (SEZ), $ billion

It is planned to launch a SEZ in the second half of 2022

Russia Benefit – Only for port SEZs (0% between residents) When reimbursing costs, 100% of excise taxes paid are taken into account 0% (up to 10 years) 0% (up to 5–15 years) 0 rubles (up to 10 years); benefits for the tourist and recreational SEZs Benefits for import

632.2 billion rubles (≈$9.03 billion)

Source: Compiled by the authors based on the materials of the Association for the Development of Clusters, Technology Parks and SEZ of Russia (2021) Note: aThe duration of the benefit depends on the amount of investment

As shown in Table 2, over the 7 years, the number of residents of SEZs in Russia has increased by 126.18%, the number of jobs created—by 56.69%, the revenue of residents—by almost five times, and labor productivity—by 46.34% (higher than the average in Russia). The correlation of all parameters with the tax climate is high: the number of residents—51.17%, jobs created—60.30%, resident revenue—65.08%, and labor productivity—39.29%. Consequently, improving the tax climate contributes to the development of SEZs in Russia. However, given their generally high competitiveness under sanction restrictions, it is not

recommended to strengthen tax incentives to maintain the replenishment of the state budget. Instead, it is recommended to change the criteria for granting tax benefits to the residents of SEZs. It is advisable to move from a quantitative (volume of investment) to a qualitative criterion: support for systemic import substitution throughout the value chain, implementation of breakthrough innovations, and the creation of additional jobs. As an alternative or addition to the above recommendation, it is proposed to create a new SEZ of service type in Russia, namely offshore zones. Their tax regulation should imply zero rates on all taxes. The advantages of their creation in Russia are as follows: 1. Support for employment due to the requirement for mandatory creation of a certain number of jobs in offshore business 2. Additional state budget revenues from registration and mandatory annual fees from offshore business 3. Strengthening the ruble exchange rate through the requirement for offshore businesses to conduct a certain share of financial transactions in Russian rubles

5 Fig. 1 Expert assessment of the competitiveness of special economic zones of the Russian Federation from the perspective of the tax climate in 2021, points 1–10. Source: Developed by the authors

Conclusion

Thus, the study of the current practice of tax regulation in SEZs of the Russian Federation has revealed fairly high competitiveness of their tax climate. The recommendations

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Table 2 Trend analysis and correlation of tax climate with parameters of SEZs in Russia in 2014–2020

Year 2014 2015 2016 2017 2018 2019 2020 Trend (2020/2014), % Correlation with the tax climate, %

Tax climate (paying taxes), points 1–100 79.2 79.5 79.3 79.2 79.1 79.6 80.5 1.64 100.0

Number of residents (cumulative total), units 382 451 549 683 767 796 864 126.18 51.17

Number of jobs created, pcs. 12,954 18,520 21,186 28,421 36,836 42,120 46,205 256.69 60.30

Revenue of residents, million rubles 53,391 64,654 115,186 156,101 193,031 237,846 287,969 439.36 65.09

Labor productivity, million rubles/person 4.1 (Russia: 3.1) 3.5 (Russia: 4.0) 5.4 (Russia: 4.0) 5.5 (Russia: 4.0) 5.2 (Russia: 4.3) 5.8 (Russia: 5.3) 6.0 (Russia: 5.6) 46.34 39.29

Source: Compiled and calculated by the authors based on the materials of the Association for the Development of Clusters, Technology Parks and SEZ of Russia (2021) and World Bank (2022)

for improving the tax regulation of SEZs of the Russian Federation in the context of sanction restrictions include the following: 1. The transition from quantitative (volume of investments) to qualitative (support of Russia’s priorities in the field of sanction crisis management) criterion for granting tax privileges to residents of SEZs 2. Creation of offshore zones The contribution of the research to the literature lies in the clarification of the features and prospects for improving tax regulation in SEZs of the Russian Federation in the context of sanction restrictions. The practical significance of the research lies in the fact that the proposed recommendations will make it possible to fully disclose the potential generation of SEZs of anti-crisis effect under sanction restrictions and will be useful in practice to ensure the stability of the Russian economy under sanctions.

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Financial Strategy of Managing Risks to the Sustainable Development of a Region Aziza B. Karbekova , Nurbek K. Musakulov and Ekaterina A. Berezina

Abstract

In this work, we perform a systematisation of the modern financial strategies of reducing the risks to sustainable development at the regional level. To achieve this goal, we use a range of research methods, namely the method of unification, the method of adaptation and the comparative method. We also analyse programme documents on the issues of implementation and typology of financial strategies in this sphere. We have revealed that the used types of financial strategies are mainly based on approaches that are connected with the regulatory and targeted debt aspect and the aspect that is oriented toward the object component of financing (sources of financial provision of projects within sustainable development of regions). The novel aspect of this research consists in the elaboration on the issue of typology of financial strategies for managing the goals and risks to the sustainable development of regions. Keywords

Sustainable development of region · Risk management · Sources of financing · Regulatory approach · Debt issues · Green bonds · Social impact bonds · Sustainable development bonds

JEL Codes

J38 · L59 · Q01 · Q57 · Q56 A. B. Karbekova (✉) · N. K. Musakulov Jalal-Abad State University, Jalal-Abad, Kyrgyzstan A. V. Tolmachev Kuban State Agrarian University named after I.T. Trubilin, Krasnodar, Russia E. A. Berezina Vyatka State University, Kirov, Russia

1

, Alexey V. Tolmachev

,

Introduction

The goals of the Agenda for Sustainable Development were declared by the UN in 2015. They envisage the development of the world community until 2030. Within the new UN course, a new stage of activities of countries and supranational structures in solving the problems of sustainable development was determined. The UN members that declare support for the UN policy in this sphere, adopted obligations to satisfy the economic needs of society (liquidation of poverty; prosperity; economic growth) and citizens’ needs for education, healthcare, etc. The general directions of the Sustainable Development Goals are reconsidered, and the key priorities are determined, being adapted at the level of countries to the needs of regions (territories, cities). Accordingly, there is a search for financial opportunities to implement the targeted benchmarks of regional sustainable development. The key condition of implementing the above goals is the complex financing of measures on certain Sustainable Development Goals within countries’ territories. A financial strategy defines the safety of the implementation of the sustainable development elements and is the main driver of restoration (prosperity) of cities and regions. The existing problems in the socio-economic (pandemic, lockdown and crises related to the fight against the consequences of these events), political and environmental spheres lead to unpredictable risks, which could create large barriers to further development. The fight against the consequences of various negative consequences for countries that have significant differences in the socio-economic and climate development of territories could be especially difficult. Given the possible negative scenarios and the need to eliminate the revealed problems, it is necessary to search for efficient financial strategies for implementing the goals and reducing the risks to the sustainable development of regions. The goal of this work is to systematise the modern financial strategies for reducing the risks to sustainable

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_107

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development at the regional level; the tasks resolved include identification of the approaches to the financial strategies of managing these risks and assessment of the approaches’ adaptability in developing countries.

2

Materials and Methods

Analysis of the scientific literature on the topic of this research has shown that financing of the management of sustainable development risks at a regional level has been studied in Aarhaug and Gundersen (2017), Clark et al. (2018), Doh (2020), Guerrero and Castañeda (2022), Koh et al. (2021), Lukšić et al. (2022), Schumacher et al. (2020), Turnbull (2017) and Whisnant and Vandeweerd (2019). Still, there is a lack of studies devoted to the systematisation of the types of financial strategies used at the modern stage of economic systems’ formation. In the process of resolution of the research tasks, we use the following methods. The method of unification is used to formulate a set of financial strategies that exist in the modern state of studies of this direction and the practice of their implementation. The method of adaptation of the components and complexity of financial strategies is utilised to perform a forecast assessment of their applicability under the conditions of development of regions of various categories of countries. The comparative method is used to evaluate the potential opportunities for the further use of the given strategies. We analyse the programme materials of the UN on the declaration of financial strategies in this sphere and the scientific materials devoted to the considered problems.

3

Results

Let us analyse the categories and characteristics of the approaches to financial strategies for managing the risks to sustainable development at a regional level. A regulatory approach has been formulated according to the provisions of the international programmes for the financing of sustainable development. It is necessary to dwell on the UN’s positions, formulated in the context of the programme of financing of sustainable development at different levels (United Nations, 2015). According to this programme, financial strategies include national financial strategies; domestic private financial strategies; international government financial strategies; international private financial strategies. Let us dwell on the characteristics and types of domestic private financial strategies for managing sustainable development and its risks at the level of regions, which have been formulated in Clark et al. (2018). The authors distinguish a strategy implying the State-guaranteed (guaranteed by regional authorities) balance of the indicators of interests

of investor and implementation of the goals (minimisation of risks) of the territory’s sustainable development; strategies that are based on providing the investor with opportunities to achieve their interests and their obligation to finance the implementation of goals (minimisation of risks) of the territory’s sustainable development. The first strategy is most attractive for investors from the position of effectiveness and protection of investments at all stages of the investment process management. The second category of financial strategies is less reliable in the aspect of effectiveness, but more attractive in the context of opportunities for implementing own projects during the achievement of a certain goal (provision of the reduction of risks) in the sphere of sustainable development. The authors of Clark et al. (2018) provide examples of green (eco-oriented) supply chains, which investors implement in a certain territory (region). An example could be the dynamics of the influence of implementing the UN programmes on the environment and the organisation of green supply chains in the processing and light industry of the Philippines, where companies have a significant effect on sustainable environmental development. The government, consulting with the UN representatives, developed approaches to managing the green supply chains of finished products (Cruz et al., 2021; Sutawidjaya, 2022). Due to the adaptation of the UN programmes in the sphere of environmental protection and management of green supply chains, the Philippines demonstrated positive results in risk management in the context of SDG 12. As is shown in Table 1, the result in the sphere of managing the main risks to SDG 12 in regions that are involved in the manufacture of products which influence the ecology and which supply chains required greening was high in 2019. However, the results allowed implementing the country’s goals in organising green supply chains at the level of industrial regions only by 66.6%. The example of the Philippines demonstrates the successful attraction of private financial investments in the management of risks to the organisation of supply chains at a regional level. It is possible to note a high level of interaction between the government and business in the sphere of financing of measures to minimise the risks to the SDGs in the regional context. A targeted debt approach is based on the characteristics of financial strategies that envisage investing in debt issues (bonds) obligations) under the guarantees of performing certain targeted measures in the sphere of sustainable development. This approach to identification and characteristics of financial strategies is described in Lukšić et al. (2022). By the example of the Western Balkans, the authors analyse the use of green bonds that imply selling bonds in exchange for obligations from the government (regional authorities) to implement eco-oriented projects; “social bonds”, which are oriented toward social projects in regions; “sustainable

Indicator Municipal solid waste CO2 emissions during production Electronic waste Nitrogen emissions (production) Nitrogen emissions (import of materials) CO2 emissions (import of materials) Complex index of SDG 12 Maximum negative value of countries for each component of the index Level of achievement of goals in managing the risks to SDG 12 (0–100%) Type of financial strategy of managing the risks to SDG 12

100 (green indicator)

66.6 (problems remain due to the insufficient level of achievement of goals) 100% private financial strategies

100% private financial strategies

2020 0.4 5 3.9 4.2 0.6 0.9 2.5 100

2019 0.5 2.9 2.8 8.4 2.8 0.3 2.95 100

Source: Compiled by the authors based on Cambridge University Press (2022), Cruz et al. (2021) and Sutawidjaya (2022)

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3

1.1 1.2 1.3 1.4 1.5 1.6 1 2

Table 1 Dynamics of the complex index of UN SDG 12 of Philippines for 2019–2021

100% private financial strategies

100 (green indicator)

2021 0.8 9.2 3.9 8 0.9 1 3.96 100

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development bonds”, which are connected with complex investing in the management of the risks to sustainable development at the level of certain territories (country on the whole). There is also an approach that assesses the types of financial strategies depending on the sources of financing for regional projects of managing the risks to sustainable development. Analysis of the materials of Aarhaug and Gundersen (2017), Doh (2020), Guerrero and Castañeda (2022), Koh et al. (2021), Schumacher et al. (2020), Turnbull (2017) and Whisnant and Vandeweerd (2019) allows distinguishing the following types of financial strategies for ensuring sustainable development and reducing risks in this sphere at the level of regions: 1. Self-financing, which implies the provision of the management of goals and risks using the region’s resources (local tax revenues, revenues from rental and region’s property sales). According to the authors, the focus on regions’ assets is effective from the position of the possibility of timely receipt of assets for the implementation of sustainable development projects. Self-financing is also rather effective for regional budgets during the participation in the financing of sustainable development projects with a high level of forecasting, control and openness for the participants of the interaction. According to Koh et al. (2021), the focus on the strategy of self-financing is effective in regions with a high level of local authorities’ sustainability, which is the ability to ensure communication with the local community on the necessity to implement goals and provide protection from risks within the main components of sustainable development and the efficiency of interaction with local business, science and central authorities regarding their involvement in the resolution of the current problems. The research on implementing the tasks in the Republic of Korea has shown that the highest effect of self-financing of goals and minimisation of risks was observed in ten cities of the Republic of Korea, which have a high level of sustainability of local authorities (Koh et al., 2021). Other studied cities did not demonstrate significant results in the implementation of the given financial strategy due to the insufficient involvement of local authorities in the process of adoption and realisation of goals and reduction of sustainable development risks at a regional level. 2. Crediting, which is the basis of financial provision in the sphere of implementation of all three components of sustainable development of regions (environmental, social and economic), due to the temporary use of borrowed assets. Schumacher et al. (2020) note that in the case of regions with high climate risks (e.g., certain territories of

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Japan), it is advisable to obtain credited funds from credit establishments in regions that do not face such risks. 3. Budget allocation, which implies government financing in the form of budget transfers. According to Guerrero and Castañeda (2022), the effectiveness of implementing such a financial strategy is possible in the case of observation of the following conditions: budget allocation for the achievement of goals and reduction of sustainable development risks under the condition of balanced change in sources that pose threats, not the liquidation of the negative consequences of certain processes or events. Such a strategy would be effective only as a means of preventing risks in the management of regions’ sustainable development. 4. Investing as a form of financial provision of goals and management of sustainable development risks of regions. This type of financial strategy can be used to implement goals in the spheres of economy connected to the costprofit parameters and a set of objectives in the social, economic and environmental sectors. By the example of the use of this financial strategy, the experience of achieving the goal of preserving and stimulating the growth of the population of small towns in Norway (Aarhaug & Gundersen, 2017).

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Discussion

Based on the research materials, let us evaluate the adaptability of approaches to implementing the analysed financial strategies in developing countries. The regulatory approach, which includes the list of financial strategies for managing sustainable development risks, provides extensive traditional possibilities to ensure projects on the main components in this sphere at a regional sphere. The main part of financial strategies of this category are implemented in developing countries, which demonstrate quick growth and compete with developed countries (e.g., China). The selection of the most acceptable financial strategies for this category is connected with targets in the sphere of sustainable development of regions and the level of sustainability of central and regional authorities. The targeted debt approach, which is represented by financial strategies of investing in debt issues (bonds) under the guarantees of conducting specific measures and activities in the sphere of sustainable development (green bonds, social impact bonds and sustainable development bonds), could be applied under the conditions of justified promotion of the given bonds among the local population. An important element of the implementation of this approach (issue of bonds) is time management, provision of the sustainability of region’s local authorities, open and transparent substantiation

Financial Strategy of Managing Risks to the Sustainable Development of a Region

of effect from the measures that are implemented due to the issues of the bonds and control over the achievement of goals within the considered components (social, environmental and economic). Orientation toward this approach could take place in regions with solvent population; accordingly, regions with a high level of poverty will not be able to ensure a high level of sales of the above bonds. The approach that characterises the types of financial strategies depending on the sources of financing has a lower subject orientation compared to the regulatory approach. However, it includes financial strategies that are also traditional for the provision of sustainable development—though the objective milestone is used. The application of all financial strategies of this approach in developing countries can be achieved in the case of observing the conditions that stimulate their implementation. The use of such financial strategy as self-financing implies a rather sustainable economic state, which could be achieved in regions of countries that are at the stage of transition from developing to developed economic systems (e.g., China).

5

Conclusion

At the modern stage of development the economic science and the international, national and regional practice in the sphere of sustainable development, there is a large number of approaches to the typology of financial strategies of the studied category. This is due to the fact that the issue of financing of projects in this direction has not been fully studied from the methodological point of view, despite its large importance. There are no justified methodologies for identifying the choice of the most acceptable and optimal financial strategies at the level of a country and the level of its regions. Given the above, there appears a necessity to adapt the existing approaches to financing of the achievement of goals and management of risks in this direction. The emergence of new goals and risks to the management of sustainable development of regions will allow formulating new financial strategies for their provision. It is worth noting the effectiveness of financial strategies in the sphere of managing the risks to the sustainable development of regions in countries that focus on the export of products with high value added (e.g., the Philippines). The export orientation of the industrial development of regions influences the implementation of strategies to fight the risks to the SDGs.

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References Aarhaug, J., & Gundersen, F. (2017). Infrastructure investments to promote sustainable regions. Transportation Research Procedia, 26, 187–195. Cambridge University Press. (2022). Sustainable development report. https://dashboards.sdgindex.org/rankings. Date of access 23 May 2022. Clark, R., Reed, J., & Sunderland, T. (2018). Bridging funding gaps for climate and sustainable development: Pitfalls, progress and potential of private finance. Land Use Policy, 71, 335–346. Cruz, V. D., German, J. D., & Fenix, M. E. G. (2021). Green supply chain operations reference (G-SCOR): An application for small garment manufacturers in the Philippines. In Proceedings of the 11th annual international conference on industrial engineering and operations management Singapore (pp. 4187–4198). Doh, S. (2020). Social entrepreneurship and regional economic development: The case of social enterprise in South Korea. Sustainability, 12, 8843. https://www.mdpi.com/2071-1050/12/21/8843. Date of access 24 June 2022 Guerrero, O. A., & Castañeda, G. (2022). How does government expenditure impact sustainable development? Studying the multidimensional link between budgets and development gaps. Sustainability Science, 17, 987–1007. Koh, J., Huh, T., & Ye, М. (2021). Developing an index of sustainable development goals for local governments: the case of Gyeonggi province in Korea. Ecosystem Health and Sustainability, 7, 1. https://www.tandfonline.com/doi/citedby/10.1080/20964129. 2021.1980437?scroll=top&needAccess=true. Date of access 24 June 2022 Lukšić, I., Bošković, B., Novikova, A., & Vrbensky, R. (2022). Innovative financing of the sustainable development goals in the countries of the Western Balkans. Energy, Sustainability and Society, 12, 15. https://energsustainsoc.biomedcentral.com/articles/10.1186/s13705022-00340-w#citeas. Date of access 24 June 2022 Schumacher, К., Chenet, Н., & Volz, U. (2020). Sustainable finance in Japan (ADBI Working Paper Series, 1083). https://www.adb.org/ sites/default/files/publication/571621/adbi-wp1083.pdf. Date of access 24 June 2022. Sutawidjaya, А.Н. (2022). Critical attributes on green supply chain strategy implementation: The case of a Indonesia and Philippines manufacturing. 7TH Asia International Conference 2021, 9(1), 213–214. Turnbull, S. (2017). Democratizing the wealth of cities: self-financing urban development. Environment & Urbanization, 29(1), 237–250. United Nations. (2015). Addis Ababa action agenda of the third international conference on financing for development/General Assembly United Nations, Sixty-ninth session, 27 July 2015, A/RES/69/313. http://www.un.org/ru/documents/ods.asp?m=A/RES/69/313. Date of access 24 June 2022. Whisnant, R., & Vandeweerd, V. (2019). Investing in the new blue economy: The changing role of international development organizations in catalyzing private sector investment in support of regional strategic action programmes for the sustainable development of coasts and oceans. Journal of Ocean and Coastal Economics, 6(1), 8. https://cbe.miis.edu/joce/vol6/iss1/8/. Date of access 24. June 2022

Analysis of Mortgage Lending in Conditions of Instability Shakizada U. Niyazbekova , Galina S. Margatskaya , Yelena S. Patashkova , Oksana A. Stepannikova , and Baldyrgan K. Jazykbayeva

Abstract

Keywords

This research considers mortgages as an effective tool for solving problems in the real estate market and improving socio-economic indicators and the population’s welfare. In fact, there are various problems in the development of mortgage loans. This topic is currently relevant due to its relative novelty, the imperfection of the real estate market, and many negative socio-economic factors of the macro environment. The paper identifies the problems and prospects for the development of mortgage lending in the country. It is known that the primary purpose of a mortgage loan is to simplify public access to the acquisition of real estate (housing). Since the cost of good housing in the real estate market is relatively high, significantly exceeding the incomes of most citizens, a mortgage, in theory, becomes an attractive way to purchase real estate, regardless of a person’s income level, with minor inconveniences. However, as experience shows, in practice, a mortgage loan does not always work in accordance with theory, thereby losing its main function of simplifying the process of acquiring real estate. Given that mortgage loans are a relatively new phenomenon in Russia, which is associated with many problems, to assess the prospects for its development in the country, it is necessary to conduct a detailed analysis of the situation using statistical data.

Welfare of the population · Mortgage lending · Socioeconomic factors · Income level · Purchase of real estate

S. U. Niyazbekova (✉) Financial University under the Government of the Russian Federation, Moscow, Russia Moscow Witte University, Moscow, Russia G. S. Margatskaya · Y. S. Patashkova Turan University, Almaty, Kazakhstan e-mail: [email protected]; [email protected] O. A. Stepannikova Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia

JEL Codes

G21 · H81

1

Introduction

Problems in the development of mortgage loans in Russia are closely related to institutional problems of macroeconomic nature, systemically affecting almost all regions, and to which less developed subjects are most sensitive (Analytical Center for Mortgage Lending and Securitization, 2022; Baidalinova et al., 2021). These problems include the following: high inflation rates, instability of the economy, currency fluctuations, low average incomes of the population, high unemployment rate (especially in backward regions), low development potential of most regions (due to which there is no interest in mortgage lending), lack of socially-oriented mortgage programs on favorable terms for certain groups of borrowers, high mortgage interest rates, high risks of taking loans for economic reasons, citizens’ distrust of the state and banks, lack of affordable and suitable housing (including at an adequate price), and a considerable number of monopoly participants in the mortgage market (Baigireyeva et al., 2021; Berkovec et al., 1994). Thus, according to some data, more than 60% of the Russian population needs to purchase housing or improve housing conditions (a significant part of the housing stock in the country and regions is very outdated) (Berstembayeva et al., 2021; Evmenchik et al., 2021).

B. K. Jazykbayeva Karaganda University of Kazpotrebsoyuz, Karaganda, Kazakhstan # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_108

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According to experts, about 1% of the country’s population can afford to buy housing on their own (without a loan) (Federal State Statistics Service of the Russian Federation, 2020; Gavrilova, 2018).

2

Literary Review

Scientists were engaged in the development of mortgage lending, lending to the banking system: Baidalinova et al. (2021); Baigireyeva et al. (2021); Berkovec et al. (1994); Berstembayeva et al. (2021); Evmenchik et al. (2021); Gavrilova (2018, 2019, 2020); Gavrilova and Danaeva (2021); Gorbacheva (2020); Krainer and Laderman (2014); Madysheva et al. (2021); Maisigova et al. (2021); Niyazbekova, Ivanova, et al. (2021); Niyazbekova, Kurmankulova, et al. (2021); Niyazbekova, Moldashbayeva, et al. (2021); Nurpeisova et al. (2021); Semenyuk et al. (2018); Troyanskaya et al. (2021).

3

Results

Solving most of the problems with mortgage loans in Russia requires institutional measures to eliminate the above negative factors. Currently, the state ensures their elimination based on a project approach implemented through a number of national strategies, plans, and projects of socio-economic importance. The effectiveness of such measures can be indirectly proved by the experience of the USA, where the rapid development of mortgage lending occurred in the second half of the twentieth century, as this was facilitated by the stable economic growth of the country against the background of rising world prices for raw materials and the strengthening of American multinational corporations in the world, which provided the USA with an influx of huge funds, including those invested in the mortgage market. However, as the history of the mortgage crisis in the USA in 2007–2008 has shown, the mortgage market requires special regulation, considering the connection with other economic sectors and the pace of their development. One way or another, mortgage lending requires a special approach in its regulation by institutions, including the state, especially in conditions of an imperfect financial market, which is also relevant for a country with large imbalances in the development of the mortgage market. For example, mortgage arrears during crisis periods in Russia went against the interests of banks, which were forced to tighten requirements for borrowers, for whom mortgage lending began to quickly lose attractiveness, which closed the system and did not allow it to develop.

Accordingly, in such a situation, external influence can be effective by achieving a special balance in the interests of creditors and borrowers. For example, in the USA, given the existing problems, institutional measures have long been taken to implement a two-tier model of mortgage loans, which provides for the presence of secondary organizations (special agencies) in addition to the lender, which preserves mortgage loans by issuing securities, which protects the interests of the lender and the borrower in a special way. The agency issues securities (mortgage bonds) to the financial markets to provide protection against the depreciation of the borrower’s real estate. In Russia, such a model is only partially accepted. In general, almost all problems of the development of mortgage lending in Russia come from the socio-economic macro-environment. Unstable economic conditions and low average wages by world standards do not meet the needs of people in decent housing, the cost of which is at the level of world standards. In this regard, a mortgage is offered as a way out of a problematic situation. However, despite the presence of mortgages, their attractiveness is lost due to the same negative factors in the socio-economic environment. In practice, for most citizens, a mortgage in such conditions is unattractive because of the high interest rate, large overpayment, and long repayment period, which makes mortgage lending for the borrower very inconvenient, not corresponding to life needs and realities. This is a problem for banks because with negative trends in the macro-environment, as a rule, the objects of non-payments and debts increase, the total account of which is estimated at tens of millions of rubles. The problematic factor of the macro environment for mortgage lending in Russia is also manifested through the imperfection of the labor market—many citizens do not have official employment or often change their place of work. Therefore, a mortgage loan for most citizens becomes unavailable. The development of mortgage loans in Russia significantly constrains the growth of the informal employment sector. Simultaneously, the informal employment sector in Russia shows stable annual growth (Table 1). As can be seen from Table 1, the average number of people employed in the informal sector is constantly fluctuating between 14 and 15 million people. The number of mortgage loans issued over a number of years is shown in Table 2. It can also be noted that the decrease in the interest rate on mortgage loans in 2017–2020 contributed to a slight jump in the growth of the volume of loans issued. However, the volume of non-payments and the number of people employed

Analysis of Mortgage Lending in Conditions of Instability Table 1 The number of people employed in the informal sector in 2015–2019, thousand people

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Year 2015 2016 2017 2018 2019

Total, thousand people 14,827 15,370 14,324 14,581 14,800

Source: Developed by the authors based on the Federal State Statistics Service of the Russian Federation (2020) Table 2 Number of mortgage loans issued in 2014–2018, thousand rubles Year Quantity

2014 1012.8

2015 691.9

2016 856.5

2017 1087.0

2018 1471.8

Source: Developed by the authors based on the Analytical Center for Mortgage Lending and Securitization (2022)

in the informal sector did not show a downward trend, which may indicate the low effectiveness of this measure in eliminating problems in the development of mortgage lending in the country. Thus, such a macroeconomic situation largely means high risks for creditor banks and borrowers. With this in mind, the prospects for developing the mortgage lending market, in the absence of signs of elimination of the above problems in the structure of macroeconomics, are clearly absent, at least without more effective systemic approaches to solving problems. It becomes apparent that the mortgage loan in Russia, despite the fact of its existence and the positive pace of development, does not fulfill its original function—to make housing more affordable for citizens. Rather, the opposite situation is happening—a mortgage significantly burdens the process of acquiring housing due to a large overpayment, dependence on work with sufficient and stable incomes, and a long repayment period. As a result, there is a tendency to narrow the mortgage market segment, which is attractive mainly only for secured borrowers who purchase luxury housing, which cannot be considered a prospect for the development of the entire mortgage market. The experience of countries suggests that mortgage lending prospects are usually available only in countries where annual inflation growth does not exceed 6% in the national currency. In Russia, the consumer price index for goods and services varies greatly from 2 to 9% per year, averaging 5–6% per year, which, in this case, is a threshold indicator for the development of the mortgage market, and under the condition of instability—a fairly significant deterrent. Thus, mortgages have prospects for development in Russia only when the difference between the income of the population and the cost of real estate will decrease to an

acceptable level, at which a mortgage loan will be of practical importance for citizens with minimal inconvenience. Accordingly, the prospects for the development of mortgage lending in Russia are entirely associated with macroeconomic factors—with an increase in the level of income of the population or an increase in the volume of housing construction (including in the SME sector) to reduce the cost of housing.

4

Conclusion

Thus, a mortgage loan, despite the existing conditions for its development in Russia, currently has little prospects for development, which is mainly due to the large influence of negative macro-environment factors on the relevant market, while maintaining a large need for the population to purchase housing. According to statistics, more than 60% of the Russian population needs to purchase real estate, while only about 1% of the population has the opportunity to buy housing without resorting to lending. Based on the analysis, the influence of the growth factor of the informal employment sector on the solvency of borrowers was established. According to statistics, about 10% of the Russian population (employed in the informal “risky” sector) may be excluded from the list of potential borrowers because banks usually do not risk entering into relationships with borrowers with unstable jobs and unstable income levels. It is determined that the volume of mortgage debt growth is poorly affected by such measures as lowering the interest rate or other traditional tools to increase the attractiveness of mortgages for the population and banks. This is due to the systemic influence of the macroeconomic factor constraining the growth of incomes of the

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population, increasing citizens’ confidence in banks and the state, and solving problems with employment. It is established that these factors equally make mortgage loans an unattractive practice for borrowers and lenders (banks).

References Analytical Center for Mortgage Lending and Securitization. (2022, May 1). Mortgage lending in numbers: Statistics on mortgage lending. Retrieved from http://rusipoteka.ru/ipoteka_v_rossii/ipoteka_ statitiska/. Accessed 16 May 2022. Baidalinova, A. S., Niyazbekova, S. U., Baigireyeva, Z., & Myrkanova, A. (2021). Household food security in Kazakhstan. In E. G. Popkova & B. S. Sergi (Eds.), “Smart technologies” for society, state and economy (pp. 107–114). Springer. https://doi.org/10.1007/978-3030-59126-7_13 Baigireyeva, Z., Niyazbekova, S. U., Butkenova, A. K., & Baidalinova, A. S. (2021). Analysis of the existing human capital development monitoring system. In E. G. Popkova & B. S. Sergi (Eds.), “Smart technologies” for society, state and economy (pp. 514–521). Springer. https://doi.org/10.1007/978-3-030-59126-7_58 Berkovec, J. A., Canner, G. B., Gabriel, S. A., & Hannan, T. H. (1994). Race, redlining, and residential mortgage loan performance. The Journal of Real Estate Finance and Economics, 9(3), 263–294. https://doi.org/10.1007/BF01099279 Berstembayeva, R., Niyazbekova, S. U., & Kaldenova, G. S. (2021). Evaluation of poverty and measures to reduce it. In E. G. Popkova & B. S. Sergi (Eds.), “Smart technologies” for society, state and economy (pp. 99–106). Springer. https://doi.org/10.1007/978-3030-59126-7_12 Evmenchik, O. S., Niyazbekova, S. U., Seidakhmetova, F. S., & Mezentceva, T. M. (2021). The role of gross profit and margin contribution in decision making. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 1393–1404). Springer. https://doi. org/10.1007/978-3-030-56433-9_145 Federal State Statistics Service of the Russian Federation. (2020). Labor force, employment, and unemployment in Russia: Statistical collection 2020. Retrieved from https://rosstat.gov.ru/storage/mediabank/ 2EfrJGVJ/Rab_sila_2020.pdf. Accessed 16 May 2022. Gavrilova, E. N. (2018). Credit bureaus: Formation, performance evaluation and ways of improvement. Moscow Witte University Bulletin. Series 1: Economics and Management, 4(27), 34–42. Retrieved from https://vestnik-muiv.ru/article/byuro-kreditnykh-istoriystanovlenie-otsenka-effektivnosti-i-puti-sovershenstvovaniya/. Accessed 16 May 2022 Gavrilova, E. N. (2019). Investment banking as a direction of banking activity: Essence, features and problems of development. Moscow Witte University Bulletin. Series 1: Economics and Management, 4(31), 81–86. https://doi.org/10.21777/2587-554X-2019-4-81-86 Gavrilova, E. N. (2020). “Green” financing in Russia: Specific features, basic tools, problems of development. Moscow Witte University Bulletin. Series 1: Economics and Management, 2(33), 48–54. https://doi.org/10.21777/2587-554X-2020-2-48-54

S. U. Niyazbekova et al. Gavrilova, E. N., & Danaeva, K. L. (2021). Russian banking sector: Current state and development trends. Moscow Witte University Bulletin. Series 1: Economics and Management, 1(36), 7–14. https://doi.org/10.21777/2587-554X-2021-1-7-14 Gorbacheva, T. A. (2020). Fiscal anticrisis measures of countries during the COVID-19 pandemic. Moscow Witte University Bulletin. Series 1: Economics and Management, 3(34), 38–42. https://doi.org/10. 21777/2587-554X-2020-3-38-42 Krainer, J., & Laderman, E. (2014). Mortgage loan securitization and relative loan performance. Journal of Financial Services Research, 45(1), 39–66. https://doi.org/10.1007/s10693-013-0161-7 Madysheva, M. A., Khudzhatov, M. B., Zhaxybekova, D., Zhalbinova, S. K., & Niyazbekova, S. (2021). Management of sustainable development of tourism in cross-border territories. Academy of Strategic Management Journal, 20(S2). Retrieved from https://www. abacademies.org/articles/management-of-sustainable-developmentof-tourism-in-crossborder-territories.pdf. Accessed 16 May 2022. Maisigova, L. A., Niyazbekova, S. U., Isayeva, B. K., & Dzholdosheva, T. Y. (2021). Features of relations between government authorities, business, and civil society in the digital economy. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 1385–1391). Springer. https://doi.org/10.1007/978-3-030-56433-9_144 Niyazbekova, S. U., Ivanova, O. S., Suleimenova, B., Yerzhanova, S. K., & Berstembayeva, R. K. (2021). Oil and gas investment opportunities for companies in modern conditions. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 669–676). Springer. https:// doi.org/10.1007/978-3-030-56433-9_70 Niyazbekova, S. U., Kurmankulova, R. Z., Anzorova, S. P., Goigova, M. G., & Yessymkhanova, Z. K. (2021). Digital transformation of government procurement on the level of state governance. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 663–667). Springer. https://doi.org/10.1007/978-3-030-56433-9_69 Niyazbekova, S. U., Moldashbayeva, L. P., Zhumatayeva, B. A., Mezentseva, T. M., & Shirshova, L. V. (2021). Digital economy development as an important factor for the country’s economic growth. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 361–366). Springer. https://doi.org/10.1007/978-3-030-564339_38 Nurpeisova, A. A., Smailova, L. K., Akimova, B. Z., Borisova, E. V., & Niyazbekova, S. U. (2021). Condition and prospects of innovative development of the economy in Kazakhstan. In E. G. Popkova, V. N. Ostrovskaya, & A. V. Bogoviz (Eds.), Socio-economic systems: Paradigms for the future (pp. 1773–1779). Springer. https://doi. org/10.1007/978-3-030-56433-9_184 Semenyuk, O., Abdrashitova, T., Beloussova, E., Nechay, N., Listkov, V., & Kurbatova, V. (2018). The influence of ecology and economic factors on eco-architecture and the design of energy efficient buildings. World Transactions on Engineering and Technology Education, 16(2), 186–192. Troyanskaya, M. A., Dugalova, G. N., Adietova, E. M., Berstembayeva, R., Bekmagambetova, G., Abdikarimova, M., & Niyazbekova, S. (2021). Sustainable hotel development. Academy of Strategic Management Journal, 20(S2) Retrieved from https://www. abacademies.org/articles/sustainable-hotel-development-10946. html. Accessed 16 May 2022

Benchmark Models and Technologies in Marketing Management Irina A. Shumakova Bjao

, Elena S. Danilova

Abstract

The paper describes the opportunities provided by validating the authors’ innovation—a benchmark model of the work of the university’s enrolment board, which is relevant for contemporary educational institutions that already use the marketing management concept and those intending to implement it. The authors describe the following stages: planning, analysis of the application results, and marketing management prospects aimed at the growth of intermediate and final state metrics; the first is represented by functional sections and aggregated assessment model, and the latter includes the conversion of customer flows based on the results of the activities of the enrolment board. Additionally, these stages are aimed at improving the results of a specific university’s marketing activity in the education market. The model was tested in the higher education market of the Belgorod Region in 2019–2020, which provided the authors with new applied results, allowing the authors to determine and assess highpotential marketing management opportunities connected with an enhancement of tactical marketing functions of contemporary universities. Keywords

Benchmarking · Education marketing · Benchmark model · Marketing audit · Consumer behavior model

JEL Code

I21

I. A. Shumakova (✉) · E. S. Danilova · L. V. Zaikina · S. Bjao Belgorod State National Research University, Belgorod, Russia e-mail: [email protected]; [email protected]

1

, Ludmila V. Zaikina

, and Suj

Introduction

The implementation of the marketing management concept at contemporary educational institutions requires the use of the latest basic paradigms of holistic (comprehensive) marketing and interaction marketing. An effective application of the above is possible only given a complete rethinking of the information efficiency of marketing, using traditional and well-known marketing research tools, marketing information systems, and marketing intelligence, and advanced research technologies and methods aimed at revealing competitive advantages and drawbacks of major marketing and operational processes at a specific university, as well as at implementing remedial fit-for-purpose solutions ensuring the improvement of a university’s competitive ability. Such marketing technologies include benchmarking. We believe its scope and efficiency in education marketing are largely underestimated. As of today, it is not applied in due scope and with due efficiency.

2

Materials and Methods

Contemporary benchmarking tools, models, and methods have already been described by such scholars as Akhmadiev (2017) and Bagiyev as part of the research team in cooperation with Dligach and Solovyova (Bagiyev et al., 2016), Blazhevich (2016), Zubenok and Nikonova (2018), Kaufman (2017), Naumova and Sboeva (2018), Pivtorypavlo (2016), Senuyk (2015, pp. 140–156), Chalova and Belozerova (2018), Chechetka (2015, pp. 141–142), and Sheremetyeva and Mitropolskaya-Rodionova (2016). Various aspects of using the benchmarking technology in education marketing have been studied by Zakharova and Emelyanova (2018), Krolevetskaya as part of the research team in cooperation with Eroshenkova and Mikhailyukov (Krolevetskaya et al., 2019), Larina (2016), Mishchenko (2016), Ponomareva (2017), and Porunov as part of the research team in

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_109

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620 Fig. 1 A formalized description of the benchmark model for the activity of the university’s enrolment board. Source: Developed by the authors

I. A. Shumakova et al. 1. Benchmark model planning 1.1. The scope of modeling is represented by processes of marketing interaction between the university’s enrolment board and representatives of the customer flow (applicants) who are at the stages of the search for external information, shaping and making targeted consumer decisions 1.2. Model themes: 1.2.1. Model of an applicant’s telephone call to the enrolment board. 1.2.2. Model of an applicant’s visit to the enrolment board 1.3. Benchmarking group: institutions of higher education – participants of the top-level educational services and products market of the Belgorod Region 1.4. Knowledge available: 1.4.1. Main forms of marketing interaction between a university’s enrolment board and representatives of the flow of applicants. 1.4.2. System of assessing the quality and effectiveness of forms (unification of contacts, reducing risks of non-formalized marketing interaction and loss of customer flow representatives, implementing the analytics and analysis system, personnel marketing, and target-oriented motivation). 1.4.3. A direct relationship between the quality of preliminary marketing interactions and the result – a controllable conversion of the “applicants” customer flow 1.5. Benchmarking type: external, competitive, and functional 2. Analysis of benchmark model application results 2.1. Partners in benchmarking – enrolment boards at regional universities, branches of regional universities, and their headquartered in other regions represented in the regional education market 2.2. Data collection techniques: “mystery shopping” technique with standard and nonstandard scenarios of the interaction during applicants’ telephone calls and visits to the enrolment board of a university (or its branch) 2.3. Obtaining information: results of testing a benchmark model of a telephone call and a visit to the enrolment boards of regional universities, branches of regional universities, and its headquartered in other regions represented in the regional education market, in statistically significant scopes, for a long period encompassing numerous operation cycles 2.4. Analysis of the results obtained: calculation of assessments and level of achieving the reference standard in the “Telephone call” and “Visit” benchmark models, with a possibility to generalize the results obtained in functional blocks of modeling/assessing and shaping an aggregated benchmark assessment of competitor universities samples 3. Marketing management of changes 3.1. Developing recommendations for initiating changes in a university’s marketing strategy in terms of efficiency growth reserves of the marketing interaction with the “Applicants” customer flow 3.2. Benchmarking of improvements in the “Telephone call” and “Visit” benchmark models and assessing the efficiency of their implementation as compared to the initial level: functional blocks, aggregated assessment, customer flow conversion

cooperation with Zemlyansky, Zhadayev, and Tigranyan (Porunov et al., 2017). However, there are some specifics and limitations in the use of the above tools, models, and methods in contemporary marketing management: • Benchmarking of operational and marketing processes is quite an efficient marketing management tool that allows creating reference models of processes and procedures and assessing their actual development in terms of their completeness, sustainability, quality, and expected results • Developing the benchmark model of the process is aimed at a search for reserves to enhance its efficiency by testing various configurations and functionality of subjects and objects of benchmark comparisons in situations with variable input parameters • Specific goals of using benchmark models in marketing management of contemporary institutions include a continuous refinement and optimization of the forms and content of marketing operation interactions in an internal organizational environment which allows determining, formalizing, and providing an actual management thereof

3

Results

To solve the applied tasks aimed at improving the competitive ability of educational institutions in the regional market in the context of the implementation of the marketing management concept, we have developed and validated a benchmark model for the activity of the university enrolment board, considering the specifics of major types of the university’s marketing and communication interaction with the customer flow (applicants) at the most important stages of the consumer decision-making process concerning the search for external information on consumer options and the stage of taking a specific decision on the field of training, a form of training, tuition payment, or the university that which provides the educational service. A formalized description of the authors’ benchmark model is provided in Fig. 1. Table 1 shows the benchmark model of a telephone call to an enrolment board used to implement specialized marketing research in the regional market.

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Table 1 Benchmark model for assessing the “Telephone call to a university’s enrolment board” marketing interaction form Reference Factor/Index score 1 2 1. The “Access” model block Technical access parameters 1.1. Successful connection at first attempt 5 1.2. Availability of a navigation chatbot during the call 10 1.3. Waiting time 1.3.1. Immediate connection 10 1.3.2. Waiting for under 1 min 7 1.3.3. Waiting for 1–5 min 5 1.3.4. Waiting for over 5 min 1 Total reference score in the “Access” block per one call 25 2. “The start of interaction” model block Introduction of the enrolment board officer, a counselor 2.1. The officer introduced himself/herself by saying his/her name 3 3 2.2. The officer introduced himself/herself by saying his/her job capacity 3 2.3. The officer greeted the applicant 2.4. The officer has politely asked the applicant for identification in order to address them during the conversation 5 2.5. The officer has provided initial profiling of the customer request 10 Total reference score in the “Start of interaction” block per one call 24 3. The “Identification of the customer request, offering consumer choice options, the customized offer of educational product” model block Identification of the needs and requests 3.1. Identifying the applicants 3 3.2. Identifying persons who directly take decisions on purchasing an educational service/product 3 3.3. Determining possible fields of training, depending on the State Exams and internal tests 5 3.4. Determining the preferable and possible forms of training 3 3.5. Determining the preferable and possible methods of payment 3 5 3.6. Determining the university department to provide the training (choice of an institute, department, chair, or other structural units) 3.7. Determining whether the applicant has all documents necessary for admission 3 5 3.8. Comparing the applicant’s level of training with the “secondary school graduation certificates competition” data and minimum admission scores of the previous year’s enrolment campaign 3.9. Forming a customized offer of an educational product 5 3 3.10. Offering to contact the head or representatives of the academic unit where the applicant intends to study 3.11. Determining the priority offer that complies most with the customer request 5 3.12. Making an appointment to visit the enrolment board 5 48 Total reference score in the “Identification of the customer request” block per one call Source: Developed by the authors

The authors’ model of the “Telephone call to the university’s enrolment board” comprises six functional blocks allowing for a structurization and a benchmark comparison of major factors and indices accompanying the form of contact under study, from the technical feasibility of access and waiting time to final analysis. The suggested model enables us to do the following: • Assess a telephone call with a maximum of 193 reference scores • Determine its actual quality and marketing value • Motivate/demotivate the staff, considering the quality of implementing the marketing and communication function • Compare the data of various universities

• Determine specific promising directions for improving the situation in a given educational institution Table 2 shows the benchmark model of a visit to the enrolment board, which was used in specialized marketing research of the regional market. The authors’ model of the “Visit to the university enrolment board” comprises seven functional blocks allowing for a structurization and a benchmarking comparison of major factors and indices accompanying the form of contact under study, from the technical feasibility of access and waiting time to final analysis. The suggested model enables us to assess a visit with a maximum of 390 reference scores.

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Table 2 Benchmark model of assessing the “Visit to the university’s enrolment board” marketing interaction form Factor/index Score 1. The “Access” model block Technical access parameters 1. Making a preliminary appointment to visit the enrolment board 5 2. Assistance of the university staff in finding a way to the enrolment board office 3 3. Waiting time at the enrolment board 3.1. 0–5 min 10 3.2. 5–15 min 5 3.3. 15–30 min 1 3.4. Over 30 min 0 Total reference score in the “Access” block per one visit 18 2. “The start of marketing interaction” model block Introduction of the enrolment board officer, a counselor 2.1. The officer introduced himself/herself by saying his/her name 3 2.2. The officer introduced himself/herself by saying his/her job capacity 3 3 2.3. The officer greeted the applicant 2.4. The officer has politely asked the applicant for identification in order to address them during the conversation 5 2.5. The officer has provided initial profiling of the customer request 10 Total reference score in the “Start of marketing interaction” block per one visit 24 3. The “Identification of the customer request, offering consumer choice options, the customized offer of educational product” model block Identification of the needs and requests 3.1. Identifying the applicants 3 3.2. Identifying persons who directly take decisions on purchasing an educational service/product 3 3.3. Determining possible fields of training, depending on the State Exams and internal tests 5 3 3.4. Determining the preferable and possible forms of training 3.5. Determining the preferable and possible methods of payment 3 3.6. Determining the university department to provide the training (choice of an institute, department, chair, or other structural units) 5 3.7. Determining whether the applicant has all documents necessary for admission 3 3.8. Comparing the applicant’s level of training with the “secondary school graduation certificates competition” data and minimum 5 admission scores of the previous year’s enrolment campaign 5 3.9. Forming a customized offer of an educational product 3.10. Offering to contact the head or representatives of the academic unit where the applicant intends to study 3 3.11. Determining the priority offer that complies most with the customer demand 5 Total reference score in the “Identification of the customer request” block 43 4. The “Signing a contract” model block Formalizing relationships and signing a contract 4.1. Offering to sign a contract for education on a fee-paying basis 10 4.2. Providing a detailed explanation of the terms and conditions of the contract for education on a fee-paying basis 10 3 4.3. Amending the contract terms and conditions at the customer’s request 4.4. Specifying a fixed price of the contract, terms of payment, and fulfillment dates 5 4.5. Planning a route to the bank for making payment, or consultation on immediate online payment 5 Total reference score in the “Signing a contract” block 33 5. The “Supplementary offers: invitation to see the university website, attend supplementary events” model block Supplementary offers 5.1. Finding out what education the applicant received prior to the customer request 2 5.2. Offering an educational trajectory inside the university 5 5.3. Offering to see the website of the educational institution 2 5.4. Offering to attend an Open Day 3 5.5. Finding out the need to obtain an education loan 3 Source: Developed by the authors

The suggested models were validated in the education market of the Belgorod Region in 2017–2019 during comprehensive marketing research, which encompassed all subjects of the studied market. Only a military institution of

higher education was not included in the research, owing to its specifics in attracting the applicants’ customer flow and its belonging to a specific segment, which is not significantly connected with the location of the regional market.

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Conclusion

To summarize the above, we would like to stress that the development and implementation of benchmark models for marketing management of contemporary educational institutions are promising lines of activity. These models should be used throughout the whole process of the interaction of universities with target customer groups and flows. The described benchmark models, as well as potential ones, represent an efficient, specific, and informative tool of effective marketing control, which accompanies the implementation of the marketing management concept and allows ensuring a systemic and comprehensive character of assessing specific forms of interaction between university representatives and potential or actual consumers.

References Akhmadiev, A. N. (2017). Business stimulation tools: Benchmarking. Fundamental and Applied Research in the Contemporary World, 20-2, 78–80. Bagiyev, G. L., Dligach, A. A., & Solovyova, Y. N. (2016). Marketing technology foresight: Interaction marketing. Systemic-and-reflexive marketing. Benchmarking. Competence management. Measurement and assessment of value. Asterion. Blazhevich, A. A. (2016). Benchmarking as a modern tool for capacity development and efficiency of activity of the enterprise. Finance, Accounting, Banking, 2(21), 6–13. Chalova, A. A., & Belozerova, I. A. (2018). Benchmarking in the system of managing a contemporary enterprise. Fabula Publishing House. Chechetka, E. L. (2015). Ways to enhance benchmarking efficiency in marketing research of industrial goods markets (Synopsis of Dissertation of Candidate of Economics). Volgograd State Technical University. Kaufman, N. Y. (2017). Benchmarking as a tool of an enterprise innovative development. Contemporary Issues of Humanities and Social Sciences, 4-2, 16–18. Krolevetskaya, E. N., Eroshenkova, E. I., & Mikhaylyukov, E. P. (2019). Professional education system benchmarking in secondary

623 professional education institutions. Bulletin of Belgorod Institute for Education Development, 6(1), 98–108. Larina, L. N. (2016). The competitiveness enhancement of the university educational services for the global market: Benchmarking of educational programs of leading foreign universities as a tool of quality management system in education. In I. V. Salosina (Ed.), Proceedings of the 4th international scientific conference “International education and cross-cultural communication: Problems, search, solutions” (pp. 12–18). Tomsk Polytechnic University. Mishchenko, N. Y. (2016). Benchmarking as a tool of the education process quality management. ӨRLEU Bulletin – KST, 2(12), 30–33. Naumova, L. M., & Sboeva, I. A. (2018). Definition of “benchmarking” in the system of management tools of organization. Vestnik of Volga State University of Technology. Series: Economy and Management, 2(38), 68–81. https://doi.org/10.15350/2306-2800.2018.2.68 Pivtorypavlo, D. V. (2016). Benchmarking as a management tool for improving the competitiveness of Russian hotel facilities. CITISE, 2(6), 23. Ponomareva, K. A. (2017). Benchmarking as a tool of managing the efficiency of a higher education institution. New Science: Problems and Prospects, 1(3), 123–124. Porunov, A. N., Zemplyansky, R. S., Zhadayev, K. V., & Tigranyan, T. S. (2017). Benchmarking in preschool education: Comparative efficiency of execution of the consolidated budget in the North-West Federal District. In G. Y. Gulyaev (Ed.), Proceedings of the 6th International research-to-practice conference “Fundamental and applied research: Contemporary issues, achievements, and innovations” (pp. 214–217). Science and Education. Senyuk, A. A. (2015). Strategy and system of marketing at oil and gas machine-building enterprises aimed at competitive ability (Synopsis of dissertation of candidate of economics). Kuban State University. Sheremetyeva, E. N., & Mitropolskaya-Rodionova, N. V. (2016). Benchmarking as a systemic method of improving the competitive ability of an organization in the sphere of recreation services. Scholarly Works of the Free Economic Society of Russia, 198(2), 525–533. Zakharova, I. V., & Emelyanova, K. A. (2018). Benchmarking as a tool of innovative development of educational organizations. Bulletin of Ulyanovsk State Technical University, 2(82), 66–68. Zubenok, M. A., & Nikonova, Y. I. (2018). Benchmarking as a promising tool for innovative development in the digital economy. International Students’ Scientific Bulletin, 4-5, 728–732.

Analyzing the Circular Economy in the Context of “Green Finance” Yevgeniy V. Varavin , Marina V. Kozlova , Anna S. Komarova , Michail Yu. Makovetskij , and Sergey N. Markov

Abstract

Keywords

Purpose: Systematization and refinement of scientific and theoretical approaches to determining the essence and content of the circular economy and the possibilities of its financial support through the mechanism of responsible investment using green financial instruments in order to implement the concept of sustainable development. Methodology: In the course of the study, general scientific and special methods were used: comparison, normative, economic-statistical, etc. Findings: The connection between the green economy and the circular economy is revealed, the author’s definition of the circular economy is proposed, and the retrospective stages of its formation are specified. The thesis is substantiated that the transition to a circular economy is impossible without the development of standards and criteria for the life cycle of a product, taking into account repairs, the return of a resource to production. Responsible investment with the help of green financial instruments within the framework of the concept of sustainable development, which implies a balance and unity of three components: economic, social and environmental, should become a stimulating tool for ensuring the transition to “green growth” with conservation of resources. Originality: The results of the study can be used to improve the regulatory mechanism and state policy in the field of the use of green financial instruments, responsible investment in environmental protection and rational use of natural resources.

Sustainable development · “Green economy” · Circular economy · Green financial instruments · “Green growth” · Waste management · Resource efficiency

Y. V. Varavin (✉) · M. V. Kozlova D. Serikbayev East Kazakhstan Technical University, UstKamenogorsk, Kazakhstan A. S. Komarova · M. Y. Makovetskij Moscow Witte University, Moscow, Russia S. N. Markov Omsk Branch of the Financial University under the Government of the Russian Federation, Omsk, Russia

JEL Codes

E22 · Q56 · Q57

1

Introduction

Sustainable development is a concept that describes a balance of environmental, economic and social elements of the modern economy. The basis for the sustainable development goals was first set in the declaration known as Rio de Janeiro Agenda 21 (1992) (United Nations, 1992). The modern definition of sustainable development was formulated by the United Nations Organization in 2015 by setting out 17 goals and 169 objectives. Even though all the goals of sustainable development are interrelated, it is necessary to highlight those that reflect the economic aspects of the modern society—these are economic goals 7–9 and 12. In pursuit of the “golden calf” a person becomes a “serial killer” of all life in nature (Salikhov & Semenov, 2019). Therefore, it is natural that one of the key areas focused on achieving the goals of sustainable development, taking into account the environmental component, is the green economy. The latter is an important element helping achieve the goals of sustainable development. In turn, sustainable development is expected to result in economic growth, which is to be achieved by “the balance of all factors of production with the unconditional priority of human capital and the complete (in the future) cessation of the “washout” of natural capital” (Salikhov, 2019). On this basis, our study’s purpose is to systematize and clarify the theoretical and practical aspects of

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_110

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achieving sustainable development goals by way of the introduction of the concept of a “circular economy”, which has been actively developing in recent years around the world. To achieve this goal, it seems necessary to solve the following tasks: identifying existing approaches to the definition of “circular economy” and put it in the context of the concept of sustainable development; identification of directions for further development of the notion of “green economy”, which is a tool for achieving sustainable development goals; consideration of the theoretical and practical foundations of the circular economy as the main paradigm of sustainable development. A necessary prerequisite for further progressive socio-economic development, taking into account existing environmental restrictions, is the transition to a “green economy”, “green finance” and “green growth”.

2

Methodology

The development of a “green economy” is impossible without the formation of a special financial system that helps attract “green” investments to ensure balanced and sustainable growth. Therefore, it can be argued that investment is an important tool that supports the transition to a “green” economy (Varavin et al., 2021). Objectively, financial activity plays a key role in the transition to a sustainable global society, contributing to the resolution of problems on the way to achieving the UN sustainable development goals. Among modern foreign studies in the field of the circular economy, it is worth noting the works of such scientists as Braam et al. (2018), Mishra (2021), Stahel (2020) and others. Mishra in his article “Circular Economy in Construction” defines “circular economy” as “a system that maximizes the value of materials and products circulating in the economy” (Mishra, 2021). As you can see, in this case we are talking about saving on the extraction of raw materials and materials and the priority of reuse. In our country, a number of scientists are studying the features of the functioning of the circular economy, the most famous among them: Dorokhina and Kravchenko (2020), Kodaneva (2020), Lanshina et al. (2019), and others. In accordance with one of the approaches, the following definition is proposed: “Under the “circular economy” (synonym: “circular economy”), we mean an economy in which resources are used most efficiently and are most often used in closed cycles” (Dorokhina & Kharchenko, 2020). Also in our country, GOST 30772-2001 (State Committee of the Russian Federation for Standardization and Metrology, 2002) gives the following definition: Secondary material resources are production and consumption wastes generated in the national economy, for which there is the possibility of reuse directly or after additional processing.

All of the above makes it possible to identify the close relationship and interdependence of the “green economy” and “sustainable development”. The ultimate goal is to preserve the well-being of society through the efficient use of natural resources, as well as the return of end-use products to the production cycle (Egorova, 2014). At the same time, the circular economy is inextricably linked with the goals of sustainable development through resource conservation. Resource saving and resource efficiency are usually perceived as synonyms in Russian and are interpreted as an activity that is aimed both at minimizing the use (saving) of natural resources (including the beneficial use of energy), and at using special resource-saving technologies to reduce the generation of waste, discharges, emissions, which, accordingly, indicates the rational use of natural resources. Taking into account the established alternative scientific and theoretical approaches to the definition of basic terms and categories and clarifying them, the authors propose the following approach. The circular economy is the economic activity of a person and society, which is based on the rational use of natural resources in sustainable production and consumption with the return of secondary material resources to production in order to reduce the negative impact on the environment.

3

Results

Professor of systems management Meadows (Meadows et al., 1972) back in 1972 performed a simulation of the consequences of the rapid growth of the planet’s population with limited natural resources, in the report “The Limits to Growth”. Later, this research formed the concept of sustainable development. The growth of the economy has led to a rapid depletion of resources and, as a result, the creation of production and consumption waste. It is estimated that 20% of the world’s material extraction ends up as waste. The United Nations Environment Program International Resources Panel predicts that with an expected future global population growth of around 500–750 million people per decade, accompanied by rapid increases in living standards and purchasing power in less developed areas, the use of material resources will double between 2015 and 2050. A green economy implies it’s functioning on the principles of a closed cycle, which implies the achievement of a high level of resource efficiency, sustainable consumption and production (including the reduction of not only waste, but also discharges through treatment and a closed water supply system). In addition, it includes the so-called low-carbon economy, aimed at reducing greenhouse gas emissions into the atmosphere in order to achieve carbon neutrality, as defined by the Paris Agreement. In addition to the problem of limited natural resources, the issues of health

Analyzing the Circular Economy in the Context of “Green Finance”

and infections are becoming extremely relevant. As the COVID-19 situation has shown, the health risks associated with exponential population growth will only increase. Therefore, waste management issues become the basis of sustainable development, which necessitates the appropriate modernization of the industry. It took about 100 years to form the concept of a circular economy in the world, despite the fact that the ideology of resource conservation was initially used all over the world due to the limited technology for their extraction. Table 1 shows the process of establishing a circular economy, divided into several stages. Stahel in his work “History of the Circular Economy. The Historic Development of Circularity and the Circular Economy” also notes that the early circular economy was driven by scarcity and relied on the reuse and repurposing of objects, as well as the skills of local craftsmen repairing individual objects—infrastructure, buildings and mobile goods—to maintain their value (Stahel, 2020). A retrospective analysis allows us to conclude that even earlier there was a practical simulation of a closed cycle in conditions of limited technology in production. However, in the absence of the necessary financial mechanisms to stimulate green growth, it was abandoned. At the same time, as can be seen from Table 1, we are in a transitional period from a linear economy to a circular economy, within which three stages are combined (coexist) at once, depending on the scale of acceptance of the principles of sustainable development by states and / or business entities and individuals. The closed cycle of resource use due to availability restrictions due to geopolitical factors of resource extraction has led to the fact that some EU countries today use waste incineration to provide heat to houses, and alternative energy sources are supposed to be used to generate electricity. In the Russian Federation, there is a different approach, since our country has historically used a combined energy supply system for the country, based on local sources interconnected. This allows not only to redistribute the load during consumption surges, but also to keep a fairly low tariff for energy consumption. At the same time, local natural resources are used for fuel, which leads to the preservation of local jobs. However, despite the large low-carbon potential, renewable energy sources can be a source of difficult-torecycle composite waste. The problems of utilization of exhausted wind power plants, solar power plants, fuel cells and storage batteries are considered in a collective study by Beloborodov et al. (2015). Thus, by reducing greenhouse gas emissions through the priority use of wind and solar power plants, at the same time, the goal of the circular economy in reducing the use of primary resources is postponed. In 2009, the OECD was one of the first to highlight the concept of “green economic growth”, which defines the link

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between profitability and sustainability. Such growth encourages changes in production technologies and activities of business entities, affects the attitude of stakeholders and market performance. In 2015, the European Commission launched the first Circular Economy Action Plan. The problematic interviews conducted by the authors with representatives of the industrial sector of the economy show that even in the presence of plants for processing generated waste into secondary material resources, the main problem remains the low cost of primary raw materials compared to secondary ones. The policy documents of the European Union clearly define that green finance is a market and marketing strategy of financial institutions. Green financial instruments are applicable to the green economy, with a focus on both public and private investment. According to UNCTAD estimates, the value of sustainable investment products in global capital markets (including in the Russian Federation) in 2020 increased by 80% compared to 2019, which confirms the potential of capital markets to close the financing gap needed to achieve sustainable development goals (United Nations Trade and Development Organization, 2021). The International Capital Markets Association has set guidelines for those issuing green bonds, including for using circular projects. The same areas are included in the taxonomy of the European Union for the selection of sustainable projects for the issuance of financial instruments. The main provisions of the circular economy were outlined by the European Commission in the Green Deal 2019 (European Commission, 2019) and the EU Next Generation Plan 2020 (European Commission, 2020), which sets the stage for the green economy low-carbon euro to become the future world currency in the global monetary regime and replace “petrol dollar” associated with the pricing and trading of oil. Today, however, both sides are in a green race. In March 2022, the European Parliament confirmed the agreement reached with the EU Council on a common Environmental Action Programme. Among its priority goals is moving towards a resource-efficient welfare economy, to be achieved by 2030. Nevertheless, the role of green financial instruments in ensuring the transition to a green economy is spelled out in a framework. At the same time, there are no appropriate measures to reduce the risks of lending for circular projects, which, along with long payback periods, makes them unsuitable (unattractive) for banking services. In this context, it is worth noting the obvious insufficiency of issuing green bonds, providing loans, creating private equity funds to reorient production to the production of products or materials whose negative impact on the environment throughout the entire life cycle will be minimized or equal to zero. With the incentives available, there are also a number of constraints to

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Table 1 Establishment of the circular economy 1. 2. 3.

Before 1945 Period 1950–1973 1973 – “oil embargo” – until now

4.

1980s – until now

5.

2002 – until now “from cradle to cradle”: we remake what how we do things (Cradle to Cradle: Remaking the Way We Make Thing)

Closed cycle of resource use due to the limited technology for their extraction Open cycle of resource use due to the availability of technology for their extraction Open cycle of resource use with restriction on geopolitical factors of availability of resource extraction Closed cycle of resource use due to availability restrictions due to geopolitical factors of resource extraction Closed cycle of resource use due to limited resources

Source: Compiled by the authors

scaling up green finance (Gavrilova, 2020). At the same time, in our opinion, only such an approach will guarantee “green growth”. The transition to a circular economy will be impossible without the development of appropriate standards and criteria for the life cycle of products, taking into account their repair, the return of a secondary material resource to production, reducing energy intensity, the scale of negative anthropogenic impact on the environment, etc. (Davydova et al., 2020). Particular attention should be paid to solving the problems of achieving the goals of sustainable development in the field of resource consumption and ecology based on the use of information technologies (Peretelet, 2019). It should be borne in mind that such a transformation will require longterm changes involving a large number of stakeholders from government, business and civil society (Smirnova & Kamyshnikov, 2019). As part of our study, we will single out as the main thesis that in order to ensure a circular economy, it is necessary to combine the use of renewable energy sources, taking into account the life cycle and preserving local jobs. All of the above leads to the conclusion about the need for an integrated approach to the introduction of a circular economy, which involves taking into account the interaction of diverse and controversial social, technological (environmental) and production (economic) aspects.

4

Conclusions

A green economy implies it’s functioning on the principles of a closed cycle, which implies the achievement of a high level of resource efficiency, sustainable consumption and production. The circular economy is about reuse and waste prevention through repair, refurbishment and/or recycling. This has a number of positive consequences: new jobs are created, environmental pollution is reduced, the health of the population is preserved, the well-being of citizen’s increases as a result of the neutralization of environmental risks and adverse impacts, and new economic opportunities are created.

In the international arena, more attention is paid to measures to address the risks and opportunities associated with climate change due to the limited availability of energy resources in industrialized countries. Therefore, investors, financial regulators and central banks are more likely to bet on green financial instruments aimed at achieving carbon neutrality than on the transition to a circular economy. Thus, the low-carbon economy is put in opposition to the circular economy and hinders the development of standardization in this direction. This model is still more like an open cycle of resource use, limited by geopolitical factors in the availability of resource extraction, than a closed cycle of resource use due to limited resources. The lack of financial instruments for circular economy products is hindering the transition to green growth. Acknowledgments The study was supported by: 1. State grant of the Science Committee of the Ministry of Education and Science of the Republic of Kazakhstan (IRN АР08856044 “Developing an effective ecosystem of financial support for environmentally responsible investments in Kazakhstan”) 2. The Consortium “Sustainable Development”, established on the initiative of the Moscow Witte University, designed to unite efforts to train highly qualified specialists, develop scientific and innovative activities in the field of sustainable development to overcome the crisis in the environment, climate, education and other areas related to the Sustainable Development Goals

References Beloborodov, S. S., Gasho, E. G., & Nenashev, A. V. (2015). Renewable energy sources and hydrogen in the power system: problems and advantages. Science-intensive technologies. 151 p. Braam, G., Yuen, D., Ossenblock, H., & Toxopeus, G. (2018). Roadmap of circular routes for a circular business model. Eburon. 178 p. Davydova, T. E., Popova, A. I., & Raspopova, A. E. (2020). Green economy in the context of global sustainable development. EKONOMINFO, 1, 49–54.

Analyzing the Circular Economy in the Context of “Green Finance” Dorokhina, E. Y., & Kharchenko, S. G. (2020). Closed-cycle economics in Russia. In S. K. Ghosh & S. K. Ghosh (Eds.), Circular economics: recent trends in a global perspective (pp. 309–327). Springer. Egorova, M. S. (2014). Economic mechanisms and conditions of transition to a green economy. Fundamental Research, 6(6), 1262–1266. European Commission. (2019). The European Green Deal. Retrieved from https://ec.europa.eu/info/sites/default/files/european-greendeal-communication_en.pdf. Accessed 10 Apr 2022. European Commission. (2020). European Union recovery instrument (next generation EU). Retrieved from https://eur-lex.europa.eu/ legal-content/EN/LSU/?uri=CELEX%3A32020R2094. Accessed 10 Apr 2022. Gavrilova, E. N. (2020). “Green” financing in Russia: specifics, main tools, development problems. Bulletin of the Moscow University. S. Yu. Witte. Series 1: Economics and Management, 2(33), 48–54. https://doi.org/10.21777/2587-554X-2020-2-48-54 Kodaneva, S. V. (2020). Green economy—from understanding the content of the concept to the practice of its implementation. RUSAINS. 144 p. Lanshina, T. A., Barinova, V. A., Loginova, A. D., Lavrovsky, E. P., & Monday, I. V. (2019). Experience of localization and implementation of sustainable development goals in the leading countries in this field. Bulletin of International Organizations: Education, Science, New Economy, 1, 207–224. Meadows, D. H., Meadows, D. L., Randers, J., & Behrens III, W. W. (1972). The limits to growth; A report for the Club of Rome’s Project on the Predicament of Mankind. Retrieved from https://archive.org/ details/limitstogrowthr00mead. Accessed 10 Apr 2022. Mishra, D. K. (2021). Circular economy in construction. In Circular economy in the construction industry (pp. 11–21). Retrieved from https://www.researchgate.net/publication/356446724_Circular_ Economy_in_Construction. Accessed 10 Apr 2022. Peretelet, R. A. (2019). The role of information technologies in the transition to a circular economy. Educational Resources and Technologies, (28), 74–82.

629 Salikhov, B. V. (2019). Object structure and integral goals of sustainable progressive development. Bulletin of the Moscow University. S. Yu. Witte. Series 1: Economics and Management, 4(31), 61–68. https:// doi.org/10.21777/2587-554X-2019-4-61-68 Salikhov, B. V., & Semenov, A. V. (2019). The essence of sustainable development: definition of key concepts and qualitative integrity. Bulletin of the Moscow University. S. Yu. Witte. Series 1: Economics and Management, 3(30), 7–14. https://doi.org/10.21777/2587554X-2019-3-7-14 Smirnova, T. S., & Kamyshnikov, I. T. (2019). Problems of implementation of the sustainable development goals in Russia. Moscow Economic Journal, 8, 242–250. Stahel, V. R. (2020). History of the circular economy. The historic development of circularity and the circular economy. In The circular economy in the European Union, An interim review (pp. 7–19). Retrieved from https://www.researchgate.net/publication/ 345412282_History_of_the_Circular_Economy_The_Historic_ Development_of_Circularity_and_the_Circular_Economy. Accessed 10 Apr 2022. State Committee of the Russian Federation for Standardization and Metrology. (2002). GOST 30772-2001. Resources saving. Waste treatment. Terms and definitions. Retrieved from https://docs.cntd. ru/document/1200028831. Accessed 10 Apr 2022. United Nations. (1992). Rio declaration on environment and development. Retrieved from https://www.un.org/en/development/desa/ population/migration/generalassembly/docs/globalcompact/A_ CONF.151_26_Vol.I_Declaration.pdf. Accessed 10 Apr 2022. United Nations Trade and Development Organization. (2021). World investment report 2021. Investing in a sustainable recovery. Retrieved from https://unctad.org/system/files/official-document/ wir2021_overview_en.pdf. Accessed 10 Apr 2022. Varavin, E. V., Kozlova, M. V., & Makovetsky, M. Y. (2021). Development of environmentally responsible investment: implementation of foreign experience for Kazakhstan. Central Asian Economic Review, 4(139), 52–63.

Contribution of Higher Education to the Development of a Trusting Environment Between Participants in Tax Relations Irina V. Gashenko Levandovskii

, Yulia S. Zima

Abstract

The article is devoted to the definition of the little-studied role of higher education in the tax climate based on international best practices. The dependence of the trusting environment between the participants of tax relations from the selected factors is expressed using the equation of the multiple linear regression model. To determine the prospects for developing a trusting environment between the participants of tax relations based on improving tax literacy, the authors developed a forecast of higher education for the period up to 2030. The theoretical significance of the article is related to the disclosure of a new view on the prospects for improving the tax climate in the country (on the example of Russia)—from the standpoint of the development of higher education. The practical significance of the author’s conclusions and recommendations lies in the fact that they expand and supplement the management tools of fiscal regulation of the economy, and also contribute to the growth of the effectiveness of these tools.

1

, Maria N. Kilevnik

, and Sergei Yu.

Introduction

To achieve this goal of ensuring economic growth rates not lower than the world average and entering the top five countries (Ministry of Finance of the Russian Federation, 2022), it is supposed to achieve the task of forming a fair competitive environment to eliminate unfair competitive advantages. This determines the relevance of the search for alternative measures for developing a trusting environment between participants in tax relations in the Russian economy (Federal State Statistics Service of the Russian Federation (Rosstat), 2022; Kapitonova & Kapitonova, 2021; RIA News Agency, 2016). The research hypothesis is that improving the tax literacy of the population and business entities through higher education is a promising (alternative) measure for the development of a trusting environment between the participants in tax relations in Russia.

2

Materials and Methods

Keywords

Higher education · Trusting environment · Participants in tax relations · Taxation · Russia

JEL Codes

E62 · E63 · F38 · H21 · H22 · H25 · H26 · H32 · I25 · I26

I. V. Gashenko (✉) · Y. S. Zima · M. N. Kilevnik · S. Y. Levandovskii Rostov State University of Economics, Rostov-on-Don, Russia

The fundamental basis of the research is laid in the works of Burdakova et al. (2019) and Dudukalov et al. (2020), Druzhilovskaya et al. (2022), Morozova et al. (2018), Popkova and Sergi (2021), Yankovskaya et al. (2022), and Zhuravleva and Bogatyrev (2019). The authors formed a sample of leading countries according to the UNDP “Global Knowledge Index 2021” (UNDP, 2022) and Russian reports (Fig. 1). Figure 1 shows that in 2020, Russia was slightly behind the global leaders in the development of knowledge: it was assigned 50.60 points in 2020 and 52.3 points in 2021. For comparison, Hong Kong had a knowledge index score of 66.80 in 2020 and 61 in 2021; Germany had a score of 66.20 in 2020 and 66.9 in 2021; the global leader, Switzerland, had a score of 73.60 in 2020 and 71.5 in 2021.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1_111

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Fig. 1 Knowledge index in 2021. Source: authors based on UNDP (UNDP, 2022)

Table 1 Statistics on education, science, and taxation in Russia and the leading countries by knowledge index in 2021

Country Switzerland USA Finland Sweden Netherlands Denmark UK Hong Kong, China Germany Russia

Technical and vocational education and training he1 77.5 92.3 81.0 69.7 76.8 63.6 63.4 58.3 64.3 48.9

Higher education he2 68.6 57.8 56.1 57.9 56.2 61.0 68.3 55.9 60.2 45.8

R&D he3 65.7 64.3 57.0 65.5 58.4 57.8 58.2 45.4 61.2 27.0

Shift to more progressive taxation TX 41.5 52.8 43.9 45.9 47.3 41.8 54.1 58.1 54.2 49.8

Source: authors based on World Economic Forum (2022a, 2022b)

Let us consider higher education in comparison with technical and vocational training, as well as with research, development, and innovation (considering the entire spectrum of post-secondary education and science) (Table 1). So, in Russia, the cooperation is estimated at 49.8 points, which is higher than in Denmark (41.8 points), the Netherlands (47.3 points), Sweden (45.9 points), Finland (43.9 points), and even Switzerland (41.5 points). Among the countries in the sample, China (58.1 points) is the leader in terms of trust between participants in tax relations.

3

Results

The dependence of the trusting environment between the participants of tax relations from the selected factors is expressed using the following equation of the multiple linear regression model: TX = 56:40 - 0:05 × he1 þ 0:05 × he1 - 0:12he1

ð1Þ

Contribution of Higher Education to the Development of a Trusting Environment. . .

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Fig. 2 Higher education development to 2030 forecast. Source: Authors

Table 2 The consequences of the development of higher education for the tax literacy of the population in each of the highlighted scenarios

Scenario Initial values in 2021 Stationary scenario

Regression scenario

Progress scenario

Scenario parameters

Characteristics Probability, % From To Probability, % From To Probability, %

Higher education Value, points 1–100 Increase in value, % 58.78 – 58.51 –0.46 11 35.37 –39.83 55.61 –5.39 80 61.40 4.46 100.00 70.13 9

Shift to more progressive taxation Value, points 1–100 48.94 48.93

Increase in value, % – –0.03

47.78 48.78

–2.37 –0.32

49.07 50.99

0.29 4.18

Source: Authors

According to the obtained model, technical and professional training, as well as research, development, and innovation, do not positively impact the trusting environment between participants in tax relations. The only positive factor is higher education: transition to more progressive taxation. To determine the prospects for developing a trusting environment between the participants of tax relations based on improving tax literacy, the authors developed a forecast of higher education for the period up to 2030. Figure 2 reflects the global trend of decline (decrease in popularity due to the decline in efficiency, not payback on investment in education) of higher education. The forecast obtained in Fig. 2 allows us to make three possible scenarios:

1. The stationary scenario (unlikely—11% probability) assumes that higher education will remain at the level of 2020 and will equal 58.51 points (0.46% below the 2020 level) 2. The regression scenario (most likely—80% probability) assumes that the score will be between 35.37 points (– 39.83%) and 55.61 points (–5.39%) 3. The progress scenario (unlikely—11% probability) assumes that higher education will increase, ranging from 61.40 points (+4.46%) to 100 points (+70.13%) The scenarios are characterized quantitatively in Table 2.

Under the regression scenario, the confidence environment of taxpayers will worsen and range from 47.78 points (–2.37%) to 48.78 points (–0.32%). Under the progress scenario, the level of tax literacy will increase and will range from 49.07 points (+0.29%) to 50.99 points (+4.18%).

4

Conclusion

Higher education significantly contributes to developing a trusting environment in economy. The global trend of the declining popularity of higher education is observed, in particular, in Russia. For a larger effect, it is recommended: • • • • • •

Reducing the administrative pressure of the tax service Expansion of the network of tax information points Improvement of tax compliance Preventive withdrawal of taxpayers from the shadow zone Fostering a socially responsible taxpayer A flexible and client-oriented tax filing campaign

The theoretical significance of the article is related to the disclosure of a new view on the prospects for improving the tax climate in the country (on the example of Russia)—from the standpoint of the development of higher education. The practical significance of the author’s conclusions and recommendations lies in the fact that they expand and

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supplement the management tools of fiscal regulation of the economy, and also contribute to the growth of the effectiveness of these tools.

References Burdakova, G., Byankin, A., Usanov, I., & Pankova, L. (2019). Smart technologies in education and formation of entrepreneurial competencies. IOP Conference Series: Materials Science and Engineering, 497, 012066. https://doi.org/10.1088/1757-899X/497/1/ 012066 Druzhilovskaya, T. Y., Druzhilovskaya, E. S., Stozharova, T. V., Vilkova, E. V., & Denisova, I. P. (2022). Improving the formation of financial statements in accordance with international standards as the most important instrument for international economic integration. In E. G. Popkova & I. V. Andronova (Eds.), Current problems of the world economy and international trade (pp. 219–231). Emerald. Dudukalov, E. V., Subhani, M. I., & Ushakov, D. (2020). Human wellbeing and automotive industry: Correlations in the era of economical digitalization. E3S Web of Conferences, 217, 03004. https:// doi.org/10.1051/e3sconf/202021703004 Federal State Statistics Service of the Russian Federation (Rosstat). (2022). Investments in Russia 2019: Statistical compendium. Rosstat. Retrieved from https://rosstat.gov.ru/storage/mediabank/ Invest_2019.pdf. Accessed 11 Feb 2022. Kapitonova, N. V., & Kapitonova, A. A. (2021). Trends in the development of the shadow economy in modern Russia. Tenevaya ekonomika [Shadow Economy], 5(1), 9–18. https://doi.org/10. 18334/tek.5.1.111962 Ministry of Finance of the Russian Federation. (2022). “The main directions of fiscal, tax, and customs and tariff policy for 2020 and the planning period of 2021 and 2022” (the document was prepared in accordance with the provisions of Presidential Decree No. 204 of May 7, 2018 “On National Goals and Strategic Development Objectives of the Russian Federation until 2024” as well as the

I. V. Gashenko et al. Message of the President of the Russian Federation to the Federal Assembly of the Russian Federation of February 20, 2019). Moscow, Russia. Retrieved from https://www.minfin.ru/common/ upload/library/2019/10/main/ONBNiTTP_2020-2022.pdf. Accessed 11 Feb 2022. Morozova, I. M., Litvinova, T. N., Przhedetskaya, N. V., & Sheveleva, V. V. (2018). The problems of financing of entrepreneurship infrastructure in developing countries and their solutions. In E. G. Popkova (Ed.), The impact of information on modern humans (pp. 277–283). Springer. https://doi.org/10.1007/978-3-319-753836_35 Popkova, E. G., & Sergi, B. S. (2021). Dataset modelling of the financial risk management of social entrepreneurship in emerging economies. Risks, 9(12), 211. https://doi.org/10.3390/risks9120211 RIA News Agency. (2016, December 16). Volume of the shadow economy in Russia. Retrieved from https://ria.ru/20161216/ 1483819998.html. Accessed 11 Feb 2022. UNDP. (2022). Global Knowledge Index 2021. Retrieved from https:// www.undp.org/publications/global-knowledge-index-2021. Accessed 11 February 2022. World Economic Forum. (2022a). Global competitiveness report 2019. Retrieved from https://www.weforum.org/reports/global-competi tiveness-report-2019. Accessed 11 Feb 2022. World Economic Forum. (2022b). Global competitiveness report special edition 2020: How countries are performing on the road to recovery. Retrieved from https://www.weforum.org/reports/the-global-compet itiveness-report-2020. Accessed 11 Feb 2022. Yankovskaya, V. V., Mishchenko, V. V., & Belkina, E. N. (2022). Financial infrastructure in the cooperative sector of the economy: Current needs and development trends. In A. V. Bogoviz, A. E. Suglobov, A. N. Maloletko, & O. V. Kaurova (Eds.), Cooperation and sustainable development (pp. 1079–1087). Springer. https://doi. org/10.1007/978-3-030-77000-6_126 Zhuravleva, I. A., & Bogatyrev, S. Y. (2019). Marx’s conceptual views and directions for improving the tax system in the structure of the economy. In M. L. Alpidovskaya & E. G. Popkova (Eds.), Marx and modernity: A political and economic analysis of social systems management (pp. 547–558). Information Age.

Prospects for Anticipatory Management of Sustainability Risks in the Decade of Action (Conclusion) Elena G. Popkova

Risks inevitably accompany the economic activity. However, the problem is that the Decade of Action was marked by the rise of a whole set of risks to a critical level under the influence of the COVID-19 pandemic, crises in the world economy, and changes in global markets. This jeopardizes the implementation of the SDGs and requires a revised approach to risk management. In the case of an unexpected occurrence, risks are especially dangerous and most challenging to manage. Therefore, the new approach must ensure risk management ahead of the curve. An important role in the implementation of the new approach is the forecasting of sustainable development. The existing methodology for making economic forecasts does not allow them to achieve the required high accuracy due to the focus on a narrow set of factors. The list of factors should be expanded considerably. For example, environmental, health, and international economic trends must be considered in forecasts of sustainable development, including at the national and local levels. This book formed the scientific and methodological platform for this.

The new approach should also imply a unified theoretical vision of sustainable development risks, a common methodology, and integrated risk management measures. Identifying and managing sustainability risks in isolation neither minimizes the likelihood of their occurrence nor neutralizes their threats. The systemic interconnectedness of sustainability risks identified in this book offers an opportunity for the collaborative management of these risks. However, this implies a significant complication of risk management practices. Thus, this book formed the broad outlines of a new approach to high-impact sustainability risk management in the Decade of Action. On the scientific-theoretical and methodological platform created in the book, this approach should receive further refinement and development and undergo even more scientific discussion. Actualized in this book, the issues of improving the practice of forecasting sustainable development risks and the practice of risk management, considering the proposed recommendations, need in-depth study, to which it is proposed to devote future scientific research.

E. G. Popkova RUDN University, Moscow, Russia # The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 E. G. Popkova (ed.), Sustainable Development Risks and Risk Management, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-34256-1

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