Using a series of interviews with the heads of Russian subsidiaries of Western multinational corporations and a unique database registering the openings of their new manufacturing plants in Russia during 2014-2015, we trace the changing demography, geography, and economics of foreign direct investments in industrial assets in Russia. We demonstrate that foreign companies in general were capable of overcoming the adverse economic conditions of 2015 and were able to complete their projects of installation of new factories that were launched in 2012-2013. More importantly, economic sanctions caused accelerated completion of previously started industrial works. Such new and upgraded factories not only target current opportunities and market niches in consumer markets but also aim at exploring possibilities in core industrial markets, including mining equipment, transportation equipment, and other types of industrial equipment. We also highlight the emergence of a new type of industrial project known as “fenced field projects,” which are new manufacturing facilities within the existing industrial sites of successful Russian firms. This new type is particularly attractive for companies in the machine-building and chemical industries. Fenced field projects can be either wholly owned subsidiaries or joint ventures, but the main feature of such projects is the active use of the developed physical and business infrastructure of the “hosting” Russian company. We demonstrate not only the changes in the geographic distribution of foreign direct investments in Russia but also the impact on medium-sized industrial towns (200,000-400,000 inhabitants), the most frequent location for industrial projects by foreign multinationals.
An international team of economists examines the factors influencing the behavior of Russian depositors in the immediate aftermath of that country’s 1998 financial crisis, drawing upon two largely unutilized data sources—data from the Russian state savings bank Sberbank and a November 1998 household survey. After first reviewing the evolution of the household deposit market during the 1990s, they explore regional variations in net withdrawals from Sberbank branches during the period August–October 1998 as well as identify characteristics of individual/household depositors making (or attempting to make) such withdrawals. More severe runs on Sberbank outlets are found to be associated with more affluent and entrepreneurial regions, regions of more youthful and less educated population closer to Moscow, and areas with greater media freedom. Subsequent public opinion survey analysis of the socioeconomic correlates of runs on all Russian banks during the 1998 crisis reveals some interesting differences (in the effects of education in particular) on the propensity to successfully withdraw deposits.
Russia has tried to use economic incentives and shared historical and cultural legacies to entice post-Soviet states to join its regional integration efforts. The Ukraine crisis exposed the weaknesses of this strategy, forcing Russia to fall back on coercive means to keep Kiev from moving closer to the West. Having realized the limits of its economic and soft power, will Russia now try to coerce post-Soviet states back into its sphere of influence? Fears of such an outcome overestimate Russia’s ability to use coercion and underestimate post-Soviet states capacity to resist. Rather than emerging as a regional bully, Russia is trying to push Eurasian integration forward by becoming a regional security provider. The article relates these efforts to the larger literature on regional integration and security hierarchies – bridging the two bodies of theory by arguing that regional leaders can use the provision of security to promote economic integration. Despite initial signs of success, we believe that the new strategy will ultimately fail. Eurasian integration will continue to stagnate as long as Russia’s economic and soft power remain weak because Russia will be unable to address the economic and social problems that are at the root of the region’s security problems.
Through the Belt and Road Initiative (BRI) it is obvious that China is crafting a new space for itself in the international system and becoming more assertive and confident in its international dealings, including in Eurasia, typically considered by Russia as its backyard. This raises the question of how the BRI is presented and perceived in Russia. The article explores this question by examining the coverage of the BRI in Russia’s major newspapers between 2013 and 2019. It traces the visibility of different topics in Russian media coverage of BRI and maps the shifts in its focus over six years. The article demonstrates that while the definition of BRI in Russian newspapers includes multiple and often contradictory discursive frames that compete with each, Sino-Russian cooperation in Eurasia and, specifically, Russian proposal of “linking up” of the Eurasian Economic Union (EAEU) and BRI are unanimously supported and approved as a strategy that suits Russia’s international status. Consequently, it can be concluded that Russian newspapers support the official narrative of Sino-Russian relations and follow trends rather than create them.
Being neighbors, China and Central Asian states face common problems, which require collective response and leadership. In this article, we explore to what extent China’s increased engagement in the region since the dissolution of the USSR has included attempts to lead cooperation to address some of these common problems. We answer our research question by exploring observable leadership efforts, such as institutional development, financial support, moral or belief supply, and unilateral exemplary activities. The analysis shows that in three selected issue areas, namely counter-terrorism, infrastructure development, and water management China has made certain efforts to lead, but the scope and character of its efforts have varied significantly between different issue areas and over time. This variation can be explained in the light of China’s evolving foreign policy interests, the specificities of the Central Asian states, and the role of Russia as the other prominent external actor. While earlier China’s initiatives focused on Central Asia and Russia, the more recent ones either include Central Asian states among other members or focus only on some of them. Joining China’s projects helps Central Asian states to improve their international standing and diversify their foreign relations, but also affects regional geopolitical structure.
Rural population decline has been observed in most developed and emerging economies but has been especially apparent in postsocialist countries. In this paper, we investigate the spatial patterns and the determinants of the rural population dynamics during the transition period from 1991 to 2010 in Tyumen Province, Russia, with the aim of better understanding the forces underlying depopulation. We use descriptive and exploratory statistical tools to analyze data from population censuses and district-level statistics of agriculture. Our results reveal distinct differences in the spatial clusters of the population increase and decline in the first and second decades of the post-Soviet era. We argue that these differences reflect the penetration of market relations into the countryside. The emergence of market forces initially advantaged the areas that were more suited to agriculture, which experienced population growth in the 1990s. Later, the drop in agricultural output, market-driven restructuring of farms, and introduction of labor-saving technologies reduced employment in agriculture. During the 2000s, labor opportunities in agriculture were no longer statistically related to rural population dynamics, while population dynamics in the villages have increasingly been determined by transport accessibility to larger markets, especially to the provincial capital. Governments need to be sensitive to these spatial and temporal population dynamics to foster opportunities in the countryside, avoid the negative side effects of depopulation on local economies and ensure the provision of social services.
The article analyses Russia’s policy response to developments in its mineral resources base (often perceived as an exploration crisis), with a focus on oil. The authors review and discuss trends in exploration (including its organization and efficiency), recent developments in its financing, and the reorganization of exploration activity. The evolution of Russia’s licensing system is presented, drawing attention to changes that have affected incentives, risks, and barriers to potential resource users, both Russian and foreign. Also identified are conflicts between the objectives of resource managers and broader political goals and interests.
How does the degree of centralization and decentralization of political control affect economic performance? To investigate this question, we gather and analyze a comprehensive original data-set measuring the performance, career paths, and incentives of regional officials in China and Russia during the last 15 years. Both China and Russia combine centralized personnel selection with substantial administrative autonomy for regional officials, but differ substantially with respect to the economic outcomes produced by their bureaucratic systems. We find that in contrast to China, regional leaders in Russia are unlikely to be promoted for economic or social performance, have a lower turnover, are almost never transferred from one region to another, have less experience in executive positions, are more likely to come from the region they govern than their Chinese counterparts, and are not encouraged to show initiative in economic affairs and engage in economic policy experimentation.
This paper reports on the performance dynamics of Russian manufacturing subsidiaries of foreign multinational corporations that were established in 2012-2016. We collected balance sheets, annual income statements, and other annual reports of the representative sample (141 plants) of the general population of manufacturing plants opened in Russia by foreign multinational corporations in 2012-2016 (196 plants); further, we performed an analysis of the major business indicators, such as exit rate, sales dynamics, and financial results. We found that showing a positive gross profit (revenues minus direct production costs) was a relatively easy task and the majority of companies achieved this in the year of their official opening or shortly afterwards, both prior to, and after the beginning of, the sanctions. However, the majority of manufacturing plants opened in 2012-2014 demonstrated negative net profitability until 2016. We explained the massive shift to profitability in 2016 by the improvement in gross margins, measures taken to save “additional costs,” as well as the changes in the legal framework of foreign subsidiaries’ activities in Russia and the subsequent amendment of financial policies applied to Russian subsidiaries by their corporate parents. In general, multinational corporations demonstrated a high ability to operate under conditions of high market and institutional uncertainty and strategic flexibility in managing their newly established Russian industrial assets.
The social origin of elites is important as it, first, affects the political decision-making, and second, is an indicator of social mobility important for the stability of a political system. However, how does the consolidation of an authoritarian regime affect the composition of elites in terms of their social origin? This study investigates this question looking at a sample of Russian regional governors in the period of 1992–2016. We document a gradual decrease of the share of governors from peasants’ and workers’ families, which is most likely related to abandoning the Soviet elite recruitment practices. At the same time, the main beneficiaries of the change (outside the ethnic regions) are not the most privileged groups (children of high-ranked bureaucrats and politicians) but rather offspring of intelligentsia (doctors, teachers and engineers). Interestingly, the military social origin became more important prior to Putin’s presidency, during the era when Russian politics was more competitive and pluralist.
The Belt and Road Initiative (BRI) has attracted substantial academic attention right after its establishment in 2013. It has produced an array of scientific works analyzing various aspects of this multi-component phenomenon. Our paper is an attempt to systematically classify and further scrutinize the BRI literature within the management and economics field in order to navigate further academic inquiry into the BRI phenomenon. We used the Scopus database and a guided delimitation approach to ensure the quality and relevance of the selected papers. Based on the identified themes we propose promising avenues for future research within the Economics and Management research domain.
The Belt and Road Initiative (BRI) has attracted substantial academic attention right after its establishment in 2013. It has produced an array of scientific works analyzing various aspects of this multi-component phenomenon. Our paper is an attempt to systematically classify and further scrutinize the BRI literature within the management and economics field in order to navigate further academic inquiry into the BRI phenomenon. We used the Scopus database and a guided delimitation approach to ensure the quality and relevance of the selected papers. Based on the identified themes we propose promising avenues for future research within the Economics and Management research domain
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
Belgorod oblast is a highly successful region in Russia. The economic successes in Belgorod stem from the dynamic leadership provided by Yevgeny Savchenko for 24 years. Savchenko supports agroholdings and industrial agriculture while also adopting policies that foster the growth of small-forms of farming and organic farming. Savchenko’s agrarian policies have led to the so-called Belgorod Miracle. The Belgorod experience shows that despite a decline in gubernatorial power vis-à-vis the federal center, governors have vast powers within their regions. Personality and leadership characteristics are important variables that impact the performance of a region.
This paper debates the relationships between transition and urbanization by problematizing the operation of transition on three inter-related levels. Firstly, at the level of ideology, it is important to rehearse the understanding of transition from that of merely area-based reforms and rather understand it as a totalizing project of planetary reach, which completes the subjugation of the whole world to capitalism and crowns neoliberalism as the only global order. Secondly, at the level of practice, it is important to properly account for the spatializing effects of that ideology – which is not simply “domesticated” by local practices, but itself mediates the subsumption of pre-existing practices by capital, thus alienating them from their history. Thirdly, at the level of the urban: while urban change is usually portrayed merely as a projection of societal relations, the urban is actually the central stage where ideology mixes with the everyday, through which the societal change is mediated; new meanings, social relations, and class divisions are construed; and through which ideological transition achieves its practical completeness. What combines these three levels is the notion of urbanization of transition, which articulates the centrality of the urban in the spectacular post-socialist experience.
This paper reports on a study of formal opening ceremonies of new plants of multinational corporations in Russia. We argue that such ceremonies have profound symbolic meanings, namely “managing anxiety” and “signaling commitment,” as well as practical importance, particularly when top executives of corporate parents meet with top officials from the host countries at such ceremonies. The database embraces the entire population of public opening ceremonies of new plants of western multinational corporations (MNCs) in Russia from 2012 to 2016. The analysis revealed that, in 2016, the unwillingness of both corporate CEOs and local governors to participate in plant opening ceremonies began to increase. More than one-third of plant opening ceremonies in 2016 were “low-profile ceremonies” ignored by top officials from corporate parents and local authorities from host the country. The absence of corporate executives can indicate top corporate executives’ decreased commitment to new industrial projects in Russia. The growing absence of local governors is attributed to the smaller size of newly opened plants and the impact of sanctions imposed on Russia by the US and European Union following the inclusion of Crimea into Russia in 2014. A spectacular increase in the share of “low-profile opening ceremonies” evidenced in the data can also signal that a significant number of MNCs in Russia are adopting “low-profile” strategies when CEOs do not wish to be associated with projects with unclear timing of positive cash flow and increasing difficulties of value appropriation. This paper also indicates a promising direction for further studies—a replication study that should embrace public opening ceremonies of new plants of foreign MNCs in China, India, and Brazil—large countries with solid populations of foreign-owned manufacturing plants.