Book
Business Cycles in BRICS
This volume focuses on the analysis and measurement of business cycles in Brazil, Russia, India, China and South Africa (BRICS). Divided into five parts, it begins with an overview of the main concepts and problems involved in monitoring and forecasting business cycles. Then it highlights the role of BRICS in the global economy and explores the interrelatedness of business cycles within BRICS. In turn, part two provides studies on the historical development of business cycles in the individual BRICS countries and describes the driving forces behind those cycles. Parts three and four present national business tendency surveys and composite cyclical indices for real-time monitoring and forecasting of various BRICS economies, while the final part discusses how the lessons learned in the BRICS countries can be used for the analysis of business cycles and their socio-political consequences in other emerging countries.
Available composite cyclical indicators for Russia are surveyed, their components are enumerated and analysed. The aims, guiding concepts, and approaches of the newly established Russian Economic Cycle Dating Committee are also described. All the currently available monthly Composite Leading Indices (CLIs) are tested against the most recent cyclical turning points for their capacity to provide a timely alarm signal, especially about an impending recession. It is shown that experts’ informal judgments about Russia’s future economic trajectory remain more informative than findings derived from formal empirical rules. This suggests that there is some room for improvement of the Russian CLIs and additional efforts should be made to construct better cyclical indicators for Russia.
In many respects, the historical trajectory of the Russian economy during the Twentieth century has been a terra incognita until now. As for the official statistics, there are at least three important reasons for this. First, many relevant indicators were either not measured, or were kept secret and never published. Second, Russia (as the RSFSR) was a part of the USSR, and statistics for the RSFSR was much less prevalent than for the USSR as a whole (historical changes of the Russian borders also require special consideration). Third, an ideological dogma existed about the absence of inflation in the planned Soviet economy; therefore, all deflators (if any) were underestimated, and all aggregates in constant and/or comparable prices were overestimated (as were the corresponding growth rates). As for the unofficial historical estimates, most of them were focused on the USSR, not on the RSFSR. It’s very risky to use them as a proxy for historical indicators of the Russian Federation.
Hence, our first aim was to construct a statistical time-series that might be useful to describe the long-run trajectory of the Russian (the RSFSR and/or the RF) economy. Using previously unpublished data stored in Russian archives, we tried to extend them back as far as possible; in fact, most of them began in the late 1920s.
Our second aim was to denote periods of growth and contraction in the Russian economy and to reveal the economic factors that caused changes in trajectory. Periods of contractions during the era of the planned economy were of special interest for us. We found that recessions had occurred, not only in the market, but in the planned Russian economy as well (of course, with a significant remark that contractions in the planned economy were much rarer, but evidently more destructive).
This chapter begins with a brief history of the BRICS – from a purely analytical concept to the real-world political group with its own financial infrastructure. It then considers the role of the member countries in the global economy in terms of macro-indicators (territory, population and GDP), the production of a variety of key goods, trade and capital markets. Particular emphasis is placed on the rapid growth of the Chinese economy and the importance of its position in international commodity markets, the production of industrial goods, as well as other economic spheres. As a result, BRICS countries contribute significantly to global GDP growth, and the contribution of China is particularly important.
In large countries, the development of national macroeconomic business cycles clearly involves regional nuances that, as a rule, fall outside scholars’ fields of vision, especially when monitoring the current economic situation. Regional statistics published by the Russian Federal State Statistics Service (Rosstat) are reviewed in terms of quality, and radical disagreement between “month-on-month” and “year-on-year” monthly statistics is identified. In view of this, an original method is proposed for estimating the level of regional economic activity (REA), based on monthly official regional statistics in five key sectors of the Russian economy: industry, construction, retail trade, wholesale trade, and paid services for the population. This method transforms current “year-on-year” growth rates into specially constructed dichotomous variables, which eliminate the excessive volatility and inaccuracy of the initial time series.
On these grounds, REA indices are estimated for all Russian constituent entities for the period from January 2005 to November 2017. Composite REA indices for all five economic sectors, eight federal districts, and Russia as a whole are then calculated. Methods for visualising multidimensional regional data are also proposed. They allow us to track the regional peculiarities of the Russian economy and to discern the current phase of the business cycle more accurately and without any additional lag. Several illustrative examples for the possible application of these indices in real-time monitoring and analyses are provided.
In this chapter we aim to consider the interdependence between total factor productivity, economic welfare, and political institutions using BRICS as an empirical example. While relationships between each pair of factors have already been subject to scientific inquiry, we attempt to look at the productivity-institutions nexus in conjunction with economic development. We utilize nonparametric methods (data envelopment analysis) to estimate productivity levels for a large sample of countries and investigate the mutual relationships between productivity, GDP, and institutions for every year in the sample, as well as look into possible connections between dynamics of the three factors. We also analyze productivity trajectories of the BRICS countries in order to gain further insight into how capital-labor ratios might affect further economic development given each country’s institutional context. We show that levels of institutional development are a significant predictor for per capita GDP levels, as well as TFP levels. However, our tests for differences in TFP and growth remain inconclusive.
The current best practices in measuring, monitoring, and forecasting economic cycles are drawn from the experience of mature economies such as the USA, Japan, and several Western European countries. Meanwhile, there are a lot of peculiarities in emerging economies that should be kept in mind when developing a system for tracking and forecasting their short-run dynamics. In the literature, there have been numerous attempts to apply the international best practices to emerging economies, but these attempts have usually been sporadic. The experience of the BRICS economies accumulated in this book allows for a fresh look on the problem of the development and use of cyclical indicators and is potentially useful for other emerging countries.
Background and motivation for a study of business cycles, business tendency surveys (BTSs), and cyclical indicators in the BRICS countries are specified. The main concepts and problems involved in monitoring and forecasting business cycles in emerging countries and countries in transition are overviewed; the importance of the experience of the BRICS in this context is demonstrated; different examples of the interaction between business cycles and social and political spheres are outlined. At last, the structure of the book is adduced.
The chapter describes information content, methodological features and national practices of business tendency surveys (BTS) in Russia. These surveys are conducted jointly by the National Research University Higher School of Economics (HSE) and the Russian Federation State Statistic Services (Rosstat), and provide qualitative data on sectoral trends and short-term fluctuations over the last two decades.
The Russian BTS system covers a wide range of regions, sectors and economic activities that makes possible sectoral benchmarking. The BTS results have statistically significant compatibility with quantitative statistics and comply with international standards. These properties allow integration of the survey results in both national and international information infrastructures. Composite indicators of business confidence, business climate and economic sentiment provide early warning of changes in sectoral and overall economic activities in Russia.
Venture capital (VC) provides financial and managerial support for new innovative ideas at the initial stages of commercialization. It has helped to find the market for many radical innovations of 20th century, including personal computer, Internet and genetic engineering.
As a part of market economy venture business was not stable from the very beginning. The periods of rapid growth alternated with deep recessions. However each time VC revived anew as the Phoenix due to its very important function in modern knowledge-based economy.
This report presents an analysis of statistical data that prove the existence of several cycles in VC dynamics in the USA and the Great Britain. The main factors of these cycles formation are discussed. The author proposes two possible scenarios of development of VC market for the first 30 years of the new 21st century. A hypothesis is put forward about the relation between VC cycle's amplitude and a phase of Kondratieff's cycle.
This is the third volume in a series of five books which bring together the results of intensive research on the national systems of innovation in the BRICS countries – Brazil, Russia, India, China, and South Africa. This book looks at the relationship between small and medium enterprises and the national systems of innovation in the BRICS countries. It brings to fore crucial issues in the evolution and future trends of industrial or innovation policies for small firms: their scope, applicability, co-ordination, and main results, as well as the influence of macroeconomic, legal and regulatory environments. Taking into account the specificities and complexities of SMEs’ production and innovation systems, it seeks to inform research, policy design and implementation in the field. Combining original and detailed data, this book is an invaluable resource for researchers and scholars in economics, development studies, and political science, as well as policymakers and development practitioners interested in the BRICS countries.
The present article is devoted to a legal regulation of investments in gas industry of Russia. The author points attention of the scientist on it its perspectives in view of BRICS, on the possibilities that this form of cooperation can provide. The object of the article is the characterization of the actual legal regulation and of the investment climate in general. In the conclusion the author proposes the new approach for cooperation in the domain of the gas production in Russia.
The objective of this study is to develop a system of leading indicators of the business cycle turning points on a wide range of countries, including Russia, over a more than thirty years period. We use a binary choice model with the dependent variable of the state of economy: the recession, there is no recession. These models allow us to assess how likely is the change of macroeconomic dynamics from positive to negative and vice versa. Empirical analysis suggests that the inclusion of financial sector variables into equation can significantly improve the predictive power of the models of the turning points of business cycles. At the same time, models with financial and real sector variables obtained in the paper outperform the “naïve” models based only on the leading indicator of GDP in the OECD methodology due to either a lower level of noise (recession model) or a higher predictive power (model of the recovery from recession).
The paper represents the review of contemporary approaches to the analysis of financial market imperfections and financial crises and their impact on fluctuations of the key macroeconomic variables during the business cycle as well as the transmission mechanism of financial shocks on the real economy in the framework of New Keynesian dynamic stochastic general equilibrium models. These models are widely used for the evaluation of monetary policy effects on macroeconomy and constitute the theoretical base for elaboration the optimal monetary policy not only during the crisis but for the further perspective. The construction of such models types for different economies including the Russian economy requires considering the institutional features and specific development and functioning characteristics of the of the national financial sector and economy as a whole.
The article discusses the history and theory of economic olympic business cycles, their unity and difference. It shows how they differ from the classic business cycle. The authors analyze the role of IOC in olympic business cycle.
The BRICS countries have come a long way in terms of science and related fields, but there is still much that the group could do concerning multilateral cooperation to encourage innovation and address its members’ common challenges.
This small book is a result of the joint Project “Policy Impact of Civil Society in BRICS countries” by Public Policy Department of National Research University Higher School of Economics and “Interlegal” International Foundation, supported by International Organization OXFAM as a part of the EU funded academic research, namely “Empowering CSO Networks in an unequal Multi- polar world”. The successful completion of the project was made possible through collaboration of the “Interlegal” Foundation with BRICS experts and various NGO networks - both in Russian Federation and International ones - analyzing at the ground level the civil society activities in the BRICS countries. The book explores the effectiveness and impact of the civil societies in these fi ve countries - Brazil, Russia, India, China and South Africa – in its infl uence on the state policy evaluation and implementation. Capacity of civil society of designing policy agendas in different fi elds of governance is also been assessed.
This book shall be interesting and be of educational value to both researchers and practitioners of civil society, looking to learn from comparative analysis of different practices of citizen self-organization, and to a broader research community, interested in comparison of the BRICS countries and their societies.
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.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.