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5ANALYSIS OF PROBLEMS OF ENSURING NATIONAL COMPETITIVENESS THROUGH THE PRISM OF WELL-KNOWN MODELS OF ITS DEFINITION
Alexey V. Tebekin
Moscow State Institute of International Relations (University) of the Ministry of Foreign Affairs of Russia, Russia. E-mail: [email protected]
Abstract. The presented research is high on the agenda due to the unsolved complex of problems of ensuring the national competitiveness of the Russian Federation. The purpose of this study is to analyze the problems of ensuring national competitiveness based on known macroeconomic models for determining competitiveness, as well as models for determining competitiveness, initially formed for the meso - and microeconomic level, but suitable for assessing competitiveness at the macro-economic level (the level of national competitiveness). As a result, the paper proposes the potential ways of ensuring the national competitiveness of the Russian Federation and increasing its level.
Keywords: security problems; national competitiveness; models for determining competitiveness. JEL codes: : А10
For citation: Tebekin, A. (2020). Analysis of problems of ensuring national competitiveness through the prism of well-known models of its definition. Journal of regional and international competitiveness, (1), 5-19. Retrieved from http://jraic.com/index. php/tor/article/view/3
Introduction
Competitiveness is crucial for subjects in any competitive environment.
It should be noted national competitiveness problems persist over a long period of time. This applies both to the recent history and the older Russian history.
Peter the Great said: «I anticipate that Russians will someday or, perhaps, during our lifetime, shame the most enlightened nations with their successes in science, tiredness in work, and majesties of hard and loud fame» (Brickner, 2004).
In the middle of the 20th century, I.V. Stalin wrote: «We are 50 to 100 years behind the advanced countries. We must make up this gap in ten years. Either we do it or they will crush us.» (Stalin, 1951). Thus, the problem of national competitiveness has a centuries-old history.
To ensure national competitiveness in a pre-industrial and industrial era in an unsaturated and moderately saturated world market, where free market niches were still preserved, was quite easier. Nowadays, it is difficult to provide the national competitiveness level in conditions of saturated world market of the postindustrial era while international competition has become much more severe, with a sufficiently wide variety of fighting methods (Tebekin, 2015).
Therefore, further research with theoretical, methodological, scientific and practical perspectives on national competitiveness issues is a relevant scientific challenge predetermining the purpose of the study.
Research grounds
The methodological basis of the studies was the general research methods, as well as known applied models for assessing the economic systems competitiveness at the macro -, meso - and microeconomic levels.
The methodology of the study consisted of well-known studies on issues of ensuring national competitiveness by Bakanov D.V. (2010), Berikbolova U.D. (2016), Gelvanovsky M.I. (2006), Gurzhi A.V. (2016), Drobot E.V. (2012), Kvarchiya O.V. (2016), Kuzmin D.V. (2011), Martynenko A.G. (2016), Perskaya V.V. (2014), Shul M.I. (2012) and others.
Also, the methodological basis of the study included the original studies on competitiveness (Tebekin, Egorova, 2019; Tebekin, 2020; Tebekin, 2019; Tebekin, 2019; Tebekin, 2016; Tebekin, Petrov, Egorova, 2020).
Study contents
This study focuses on the sources of national competitiveness problems.
Considering competitiveness as the ability of the subject (in this case the national economy) to surpass competitors under certain conditions of activity, the paper discusses three main components defining these capabilities: source, process, and result.
The initial components of competitiveness are characterized by the competitive potential of the subject of environment.
The process components of competitiveness are characterized by the ability of the subject to act in competitive environment.
The resulting components of competitiveness are characterized by the ability of the subject to compete with other participants in the competitive environment for a long period of time.
By to national competitiveness, the initial, process and outcome elements are defined as follows:
- the level of development of country's production factors;
- the country's ability to achieve high (above the world average) rates of economic growth for a long period of time (medium and long term);
- the ability of country's companies (as a foundation according to K. Marx) to compete successfully with the foreign companies in the industry-specific international markets.
Indeed, these elements are traditionally mentioned in key documents for the strategic development of different countries. Russia is not an exception.
In the Decree of the President of the Russian Federation «On national goals and strategic objectives of the development of the Russian Federation for the period up to 2024», the goals related to national competitiveness are highlighted.
In terms of the development of country's production factors (the starting points of national competitiveness), the following goal is formulated — «acceleration of Russian technological development, increase of the number of organizations providing technological innovations up to 50% of the total».
In terms of achieving high rates of economic growth (process components of national competitiveness), the purpose is «ensuring the rate of economic growth above the world standards while maintaining the macroeconomic stability». Moreover, as a medium-term final result (until 2024), the following goal is given — «become one of the five world largest economies» (of course, estimated in terms of purchasing parity — author's note).
Furthermore, that Decree sets the goal of national competitiveness as «creating a highly productive export-oriented sector in the basic branches of the economy creation, ultimately in manufacturing industry and agroindustrial complex».
It should be noted that the initial, process, and resulting components of national competitiveness have also been formulated in previous strategic documents on the development of the Russian economy.
For example, the Strategy 2020 highlights the following economic development targets.
First, in terms of creating an economy of leadership and innovation, Strategy 2020 noted that by 2020 a «competitive economy of knowledge and high technologies» will be created», which should allow Russia «to occupy a significant place (5 -10%) in the markets (of the world — author's note) of high-tech goods and intellectual services in 5 - 7 and more sectors».
Second, in terms of creating a global competitive economy, Strategy 2020 noted that «increasing the business environment competitiveness, new technologies and development of high-tech industries, activation of foreign economic policy» will ensure «the long-term sustainable growth of Russian economy with an average rate of about 106.4 - 106.5% per year».
And this goes on further.
If we compare the social and economic development main targets of the Russian Federation defined in the Strategy 2020 and in the Decree, it should be obvious that the issues of ensuring national competitiveness are the recurring theme (Table 1).
Table 1 - Main targets of the Russian Federation's social and economic development, according to the Strategy 2020 and the Decree of the President of the Russian Federation «On national goals and strategic objectives for the development of the Russian Federation for the period up to 2024» reflecting the importance of national competitiveness
Reference point name Document title
The 1st step of Strategy 2020 (2008 - 2012) The 2nd step of Strategy 2020 (2013 - 2020) The Decree of the President of the Russian Federation № 204 of 7 May 2018
The increase in life expectancy For 2.5 years For 2 years Until 78 years
GDP growth 137 - 138% 164 - 166% Reach economic growth higher than world average while maintaining macroeconomic stability
Productivity growth 140 - 141% 171 - 178% High-productivity export-oriented sector in the basic sectors of the economy formation, particularly manufacturing and agroindustries, based on modern technologies and well-trained personnel provided.
GDP energy consumption decrease 81 - 83% 70 - 75%
Real income growth 153 - 154% 164 - 172% Provide steady increase of real income of Russians, as well as raise the pensions level above the inflation level; 50% reduction of poverty rate in Russia
Fixed capital investment growth 180 - 185% 215 - 223%
R&D expenditure (public and private) 1.4 - 1.6% GDP 3 % GDP Russian technological development acceleration, increasing the quantity of organizations providing technological innovations up to 50% of their total amount
Expenditure on education (public and private) 5.5 - 5.7% GDP 6.5 - 7.0% GDP Ensure global competitiveness of the Russian education. and join top 10 countries with the best general education
Health expenditure (public and private) 5.2 - 5.4% GDP 6.7 - 7.0% GDP Reduction of mortality rates of the working-age population (down to 350 cases per 100,000 population), mortality from circulatory system diseases (down to 450 per 100,000 population) oncoma mortality,
Reference point name Document title
The 1st step of Strategy 2020 (2008 - 2012) The 2nd step of Strategy 2020 (2013 - 2020) The Decree of the President of the Russian Federation № 204 of 7 May 2018
including cancer (down to 185 per 100,000 population) infant mortality (down to 4.5 per 1,000 newborns)
Achievement of a level of economic and social development due to Russia's status as the leading world power of the 21st century in the forefront of global economic competition In 2015-2020, Russia should be among the top 5 countries in terms of GDP at purchasing power parity. Russia should be among the top 5 largest economies in the world
Source: composed by author
From the point of view of the practical implementation of the main objectives of the social and economic development of Russia, the problems of ensuring national competitiveness unfortunately remain unresolved.
At the same time, in accordance with the «traditions» of strategic development if the set goals are not achieved within the time frame, the stakeholders simply move the time frame.
The typical example of such actions is the statement of the Minister of Economic Development of the Russian Federation M. Oreshkin: «GDP growth of Russia up to 2036 will be just above 3% per year starting from the 2020s» (Oreshkin, 2020).
According to the minister, it is going to happen sometime later.
It should be noted, however, that in the base scenario of the six-year macroeconomic forecast of the country's development (until 2024), approved by the Russian Government in 2018 (Oreshkin, 2020), the average GDP growth rate (Table 2) does not correspond to the requirements of the Decree discussed previously (Table 1).
Table 2 - Rates of GDP growth of the Russian Federation according to the base scenario of the six-year macroeconomic forecast of the country's development (until 2024), approved by the Russian Government in 2018
Year 2018 2019 2020 2021 2022 2023-2024
Annual GDP growth rate 1.8% 1.3% 2.0% 3.1% 3.2% 3.3%
Average GDP growth over six years 2.45%
Source: composed by author
Despite the fact that during the preparation of the base scenario of the six-year macroeconomic forecast of the country's development for 2018-2023, it was well known that in 2010-2017 the average rate of growth of world GDP was 3.8% (Bulletin on current trends in the world economy, March 2018).
Thus, the lag from the average rate of world economic growth was initially set in government documents. This approach certainly cannot ensure the achievement of national competitiveness growth, in accordance with the requirements of the same Decree.
There are numerous examples of adjusting the quantitative values of the objectives achieved (downward) if it is not possible to postpone the dates.
A theoretical analysis of known scientific sources shows that many factors are taken into account in
assessing national competitiveness, including:
- GDP;
- state expenditure on research and development;
- the human development investment;
- country's political and legal system stability;
- GDP at purchasing power parity per capita;
- citizens average life expectancy;
- natural resource use efficiency;
- export volumes;
- the inflation;
- natural resources quantity;
- environment;
- advantages of geographical location;
- companies with international competitiveness;
- labor market efficiency;
-country's financial sustainability with the national financial system flexibility;
- public debt level (both external and domestic);
- higher education and training;
- domestic market dynamism, reflected in the adequacy, speed and proportions of structural changes in the national economy in the technological order changing;
-international integration and cooperation level, the effectiveness of integrating national companies into international value chains;
- infrastructure development quality (industrial, social, transport, etc.);
- taxes, rates and tariffs;
- business culture;
- public administration quality;
- information support level (including the economy digitalization);
- others
Among the many existing approaches to national competitiveness, there is one called The Global Competitiveness Index consisting of more than 100 (113) variables characterizing the world's competitiveness in sufficient details, which are compiled in twelve benchmarks for national competitiveness (Figure 1) (WEF, 2020).
Despite the skepticism towards this kind of rating by followers of «great-power» of national competitiveness assessment (Gorgola, Monin, 2020), it should be recognized that many indicators used by the World Economic Forum in determining national competitiveness in terms of the Global Competitiveness Index (WEF, 2020) (Figure 1) are not subjective expert assessments. There are quite a lot of the objective indicators used to form the Global Competitiveness Index, which are based on comparative quantitative assessments of countries.
The World Population Growth Rate Rating, calculated as the «percentage of the relative increase (decrease) of population during a calendar year due to natural increase and international migration» is not only objective but also sufficiently competitive in terms of competitive position of the socio-economic conditions of world countries development. Russia is ranked 185th in the world out of 216 (The United Nations Department of Economic and Social Affairs: World Population Prospects, 2019.) in the rating so it can't be proud while there are three dozen countries in the world in a worse situation.
Also, it should be mentioned that national competitiveness assessment based on a multi-factor analysis, being labor-intensive, requires a significant effort to integrate these factors into qualitative indicators.
It would be useful to consider the national competitiveness problems in terms of classical approaches of the competitiveness initial components assessment.
Table 3 contains the results of classification of classical approaches reasonable for national competitiveness definition, taking into account the previous original studies (Tebekin, Egorova, 2019; Tebekin, 2020; Tebekin,
2019; Tebekin, 2019; Tebekin, 2016; Tebekin, Petrov, Egorova, 2020) for the assessment of the competitiveness initial components.
Figure 1. Group benchmarks for national competitiveness according to the Global Competitiveness Index
Source: The Global Competitiveness Report, 2019 (WEF, 2020)
Table 3 - Classification of classical approaches that can be used to determine national competitiveness
Approach name Essential features
The Theory of Absolute Advantages of A. Smith An advantage in the production of certain goods and services that one country has over all or most other countries because of climate, education, labor skills and other special factors of production.
D. Ricardo's Theory of Comparative Advantage Trade benefits for both countries, even if neither has an absolute advantage in the production of specific products, based on the alternative price definition (working hours required for the production of one item of good, expressed through the working hours required for the production of another item of good).
Method based on economic equilibrium theory It involves searching for a socially acceptable choice where limited productive resources (capital, land, labor) are used to produce different products and their distribution among the members of society is balanced. This balance means the achievement of total proportionality of: production and consumption; resource use; supply and demand; factors of production and their results (output); material and financial flows.
Method based on rating This method proposes the comparison of economic systems (including government macroeconomic systems) with the large number of indicators characterizing the system in compare with the master economic system possessing the best results in terms of comparable indicators.
Product quality assessment method It consists of a combination of measurement, calculation, organoleptic and registration methods, applied autonomously and jointly at different stages of the product life cycle.
Method based on evaluation of competitive status It has a sectoral emphasis and is based on the model of M. Porter's five competitive forces, according to which, on the one hand, the competitive conditions in the different industrial markets are never the same, but, on the other hand, their competitive processes are the same.
Approach name Essential features
The competition state (intensity) is the result of the simultaneous action of five competitive forces: First, the intensity of competition between competing producers of the same product in the industry; Second, the intensity of competition between the producers of goods; Third, the probable confrontation of existing producers and their potential competitors that could emerge in the industry; Fourth, the market power and the means of influence of raw materials suppliers on manufacturers; Fifth, the market power and the means of influence of manufacturers on consumers.
Method based on the theory of effective competition It assumes that the decision on the perspective for competitive development is made on the basis of marketing, management, organizational and other technologies assessments that ultimately reflect the economic technologies efficiency level of managed economic system. The calculation is made based on an algorithm for assessing the managed system economic technologies competitiveness (in our case it is the state), using the norms of consumer value for evaluating the competitiveness of indicators. The private competitiveness indices are calculated by dividing the sum of the product properties by the total need for this product.
Method based on the requirements profile It assumes that the most competitive economies are (in our case national economies) with the best-performing services. At the same time, efficiency of each service in the economic system is affected by many factors, including the resources allocated to the service from the budget of the economic system (in our case from the budget of the state). The assessment of efficiency of the branch involves the analysis of effective using of its resources. The method is based on assessment of four group indicators or competitiveness criteria, including performance indicators for managing the production process: 1) the cost effectiveness indices, capital assets rational use, the improving of production technology, labour management; 2) current asset management indices: company self-sufficiency, pay off debts ability, sustainable development in the future; 3) indices reflect marketing and promotion management effectiveness through advertising and trade stimulation; 4) quality and price as competitiveness indices. Thus, the requirements profile has traditionally been characterized by the following criteria: market share, cost effectiveness, weighted average price, quality, lead time, Goodwill, advertising costs. It should be mentioned that all requirements profile features can be used to assess national competitiveness, including the advertising costs, although initially targeted at the microeconomic level (enterprise level) .
A competitive polygon method Implies that the economic system is compared with immediate competitors by combination of factors. And the competitive polygons are graphical assessments of the economic system position (in our case, the position of the state) and the state-competitor's economic system presented as axial vectors in the most important areas of activity. It is possible to identify the strong and weak features of one of them relative to the other through applying a competitive polygon at the compared economies.
Method of the market share assessment It is based on the analysis of the market state structure and the identification of economic systems market opportunities, which are characterized by the indices used to determine their competitive position based on the market shares and market dynamics assessment, including: Bane index; Lerner index; Tobin index; CR Market Concentration Index; Relative Market Concentration Index; Herfindal-Hirschmann Index; Market Entropy Coefficient;Coefficient of Variation of market shares; Hanna-Kei Index; Gini coefficient; Rank Index of Concentration (Hall-Tydmann index, Rosenbluth index); Rothschild index; Lindh index; Papandreou index, etc.
The Polar Profiles Method The Polar Profiles Method is a decision-making method based on an assessment of an economic system based on a set of bipolar competitiveness scales in order to build up the development strategies. The poles of bipolar scales are represented by the antonyms of competitiveness (for
Approach name Essential features
example, strong - weak, etc.). This method evaluates the control object characteristics and concludes its future development perspectives.
SWOT analysis (or SWOT matrix) It identifies four groups of factors of internal and external managed economic system environment: Strengths, Weaknesses, Opportunities (external), and Threats (external). Competitiveness can be assessed in a coordinate system: S-W, O-T.
SNW - analysis It allows to assess the company competitiveness towards to the closest competitor by key parameters having three levels of assessment rate: Strength (stronger than the competitor), Neutral (at the level of the competitor) and Weakness (weaker than the competitor).
Source: composed by author
The following conclusions can be done by the well-known approaches acceptable for national competitiveness defining (Table 3).
First, it is obvious that the Russian Federation cannot expect to ensure the national competitiveness providing in terms of the theory of absolute advantages of A. Smith in modern saturated market (Tebekin, 2015) (see Block 1, table 3), and, like the majority of world's countries, is bound by D. Ricardo's comparative advantage theory (Block 2, Table 3).
However, it may be unpleasant for individual authors trying to eliminate the national competitiveness problem by removing the GDP components (Vymyatnina, 2017), it should be noted that the Russian Federation, according to the International Monetary Fund (IMF), is inferior to world leaders:
- by purchasing-power parity (PPP) GDP (IMF, 2019) - by almost 500%;
- By GDP by par (IMF, 2019) - by 1140%;
- By GDP by par per capita (IMF, 2019) - by 888% below the world average.
The results fully correspond to the traditional assessment according to the rating method (Block 4, Table 3).
Second, the national competitiveness problems are largely related to the lack of balance between the key factors determined by equilibrium (Block 3, Table 3), including such important indicator as main commodities export - import ratio. The corresponding ratios for 2019, calculated as percentage of export- import ratios based on the Federal Customs Service data, are as follows:
- machinery and equipment: 0.12;
- chemicals production: 0.33;
-food and raw materials: 0.40;
- metals and metal products: 1.27;
- fuel and energy products: 71.89 (FCS of Russia: import-export of the most important goods for January-June 2019).
As can be seen from the ratios, the Russian Federation export is determined more than % by fuel and energy resources, metals and timber. Country continues to be a global supplier of raw materials. At the same time, Russia remains highly dependent on high-tech goods (about 85% of the country's imports) (FCS of Russia: import-export of the most important goods for January-June 2019).
Third, according to the product quality assessment method (Block 5, Table 3) Russia could improve its national competitiveness, but it is necessary to create and implement an appropriate national quality philosophy (similar, for example, to the Japanese quality philosophy of CFP - quality, functionality, proactiveness (Tebekin, 1999), which unfortunately is in direct contradiction with the establishment of monopolies and quasi monopolies in the domestic state economy (Tebekin, 2017). The non-competitiveness damages William Ashby's law of necessary diversity (Ashby, 1956) and discourages economic agents in the domestic market to compete for both product quality and product price - quality ratio.
Fourth, the modern passage from the fifth technological order to the sixth (Theoretical and methodological foundations of the study of technological structures of the economy, 2017) is, on the one hand, a very difficult period for national economic development (VEB assessed the impact of the coronavirus on the economy and incomes of Russians, 2020), and, on the other hand, in accordance with the technology
of the competitive status method (Block 6, Table 3), is a beneficial period for domestic economy development. However, the insufficient level of science expenditure in the Russian Federation in a competition (Fig. 2) indicates that this opportunity is also unlikely to be seized for national competitiveness providing.
India 0,62%
Turkey 0,88%
Russia 1,10%
Spain 1,19%
Brazil 1,28%
Italy 1,29%
Canada 1,60%
United Kingdom 1,69%
Australia 1,88%
Netherlands 2,03%
China 2,12%
France 2,25%
USA 2,74%
Germany 2,94%
Austria 3,09%
Japan 3,14%
Taiwan 3,16%
Sweden 3,25%
Switzerland 3,37%
South Korea 4,24%
0,00% 0,50% 1,00% 1,50% 2,00% 2,50% 3,00% 3,50% 4,00% 4,50% Figure 2. The world's leading countries R&D expenditure, % of GDP
Source: The World Bank Databank. URl: https://databank.worldbank.org/
It should be mentioned that Russia is far behind world leaders in terms of funding of R&D, not only as a percentage of GDP (Fig. 2), but also in terms of absolute R&D expenditure. It is interesting that the nominal funds allocated for R&D in China, for example, are equivalent to the entire annual budget of the Russian Federation (according to 2019 data) and the USA annual R&D expenditure is almost double the Russian Federation federal budget.
Also, non-competitiveness in domestic R&D activities and the resulting inefficient use of budgetary resources should be emphasized. A typical example of national development in this sphere is the Innovation Centre Skolkovo. For ten years of its existence almost entirely using budget funds (The Accounts Chamber: expenditures for Skolkovo are 95% covered by funds from the state budget, 2016), this institution is infamous for its:
- high wages (approximately 1280% higher than the average for the Russian economy (Golden Skolkovo: gigantic money was spent on a merchant's grand scale, 2016),
- substantial compensation payments and other expenses (The Accounts Chamber complained about Skolkovo to the Prosecutor General's Office, 2016),
- unused subsidy balances in tens of billions of rubles transferred to various affiliated structures, instead of returning unused funds to the budget (How much does Skolkovo cost us?, 2020),
- huge annual bonus payments, etc.
Skolkovo is also infamous for other scandals and investigations.
Unfortunately, for decade of its activity, Skolkovo has never been remembered by the innovations.
And it is not only that Skolkovo is not associated with any significant products, but also when being disconnected of the abundant budget financing (Table 4) (FCS of Russia: import-export of the most important goods for January-June 2019) it will not be able to exist independently, similar to a patient with coronavirus without artificial lung ventilation.
It seems that Skolkovo would be much more productive and efficient if it had the necessary competitive
environment.
A similar problem of national competitiveness is unfortunately concerned with the activities of quasi-monopolies and oligopolies in many fields of the domestic economy.
Table 4 - Basic parameters of the «Skolkovo» subprogram
Key activities Funding levels per year, thousands of rubles
2013 2014 2015 2016 2017 2018 2019 2020
1. Creating and developing innovation environment 7,619,527.0 5,990,276.3 8,617,949.7 7,655,057.2 5,716,070.0 5,504,382.0 4,571,748.0 4,624,238.0
2. The establishment and development of Skolkovo Science and Technology Institute 4,876,800.0 4,750,984.2 3,419,382.5 4,750,000.0 5,400,000.0 5,700,000.0 6,000,000.0 6,300,000.0
3. Creation and
management of Skolkovo physical infrastructure 11,823,673.0 16,061,239.5 10,319,094.6 1,592,202.8 350,686.0 257,848.0 254,272.0 259,926.0
Total: 24,320,000.0 26,802,500.0 22,356,426.8 13,997,260.0 11,466,756.0 11,462,230.0 10,826,020.0 11,184,164.0
Source: composed by author
It seems that Skolkovo would be much more productive and efficient if it had the necessary competitive environment.
A similar problem of national competitiveness is unfortunately concerned with the activities of quasi-monopolies and oligopolies in many fields of the domestic economy.
Fifth, the method based on the theory of effective competition (Block 7, Table 3) might well have increased Russia's national competitiveness. But, unfortunately, it depends on the low efficiency of economic management techniques (for example, Russia's rejection of the OPEC deal in March 2020 and making the same deal in a month, but already much less remunerable for our country). We can remember the country economy funds withdrawal in accordance with budget rule, which was criticized even by the Minister of Economic Development of the Russian Federation A. Ulukaev and by Adviser to the President of the Russian Federation S. Glazhev. That is why a method based on the effective competition theory is ultimately based on the relationship between the sum of the properties and the total need for it. It is obvious that it is not possible to ensure the proper marketing of domestic products without adequate stimulation of consumer demand. In terms of international economic competitiveness, it cannot be enhanced without an efficient process of increasing national import substitution.
Sixth, if the method based on the requirements profile (Block 8, Table 3) is used, it must be noted that when the domestic economy is dominated by quasi-monopolies and oligopolies, it is practically impossible to talk about the competitiveness of the key indicators considered:
- production costs economy,
- current assets management efficiency,
- management effectiveness through advertising and trade stimulation,
- competitiveness of products in terms of quality - price ratio.
If we consider the long-term huge budget funds that was spent on proclamations (primarily on TV) that neighboring countries have it even worse, we can certainly say that the domestic products quality definitely hasn't become better.
Seventh, analyzing the competitive polygon (Block 9, Table 3), the polar profiles (Block 11, Table 3) and the SNW analysis methods (Block 13, Table 3), comparative data of the immediate competitor should be used. When considering the strategic goal of Russia's PPP top five countries in terms of GDP (Table 1), Germany (5th place) can be seen as the Russian Federation's closest competitor (6th place according to IMF).
Rating of economic development correlation of the Russian Federation and Germany according to the Global Competitiveness Index (WEF, 2020) is presented in Table 5.
Table 5 - Rating of economic development correlation of the Russian Federation and Germany according to the Global Competitiveness Index
Rating Russian Rating Germany Rating Lagging, position
GDP 11 4 7
Gross national income per capita 73 20 53
Economic freedom 98 24 74
Global competitiveness 43 7 36
Doing business 28 22 6
Property rights protection 96 13 83
International trade 105 10 95
Attraction of the foreign direct investment 31 3 28
Energy consumption 28 23 5
Food security 42 11 31
Source: composed by author
If consider the very convenient but unconstructive hypothesis that countries' economic development indices are wrong according to the Global Competitiveness Index (WEF, 2020) and the presented results are considered in terms of national competitiveness, it should be noted that the biggest lag between Russia and Germany is in the international trade ranking, which directly characterizes the international economic competitiveness of countries. It could be said that Russia's low international trade ranking is a consequence of the quasi-monopoly and oligopoly dominance, and their prosperity in the national economy is the result of corruption. There is too large a difference between the countries (Table 5) by property and economic protection ratings confirms as well as the shadow economy large scale of in Russia (Tebekin, Egorova, 2019).
Eighth, if the method of competitiveness rating based on the calculation of market share is used (Block 10, Table 3), we should remember that Russia's share even among the sixteen largest economies of the world does not reach 2 percent (Fig. 3). Obviously, we are talking about searching for (or creating) special sectoral market niches where Russia can increase its competitive advantage. Indeed, the comparative advantage theory of D. Ricardo (Blaug, 1994) states the same.
The same problem can be solved by the SWOT analysis method (Block 12, Table 3). Using this method (along with GAP-analysis tools, BCG matrices, Thompson and Strickland models, Mckinsey DPM models, PIMS-analysis models, RETS-analysis models, etc.) while determining the prospects for Russian Federation national competitiveness increasing (Tebekin, 2016) showed the great inertia of domestic economy (i.e., returning to the problem of the growth rate), both in the development of new markets (spatial diversification) and in the creation of new products (structural changes). The most effective cooperative motion (according to the GAP analysis model): «New product, but concerned with existing - new market, but concerned with existing».
Studies have shown that following classical approaches are useful for rating the initial components of national competitiveness: the theory of comparative advantage of D. Ricardo, method based on the theory of equilibrium, rating method, product quality method. Also, the methods based on: the evaluation of competitive status, the theory of effective competition, the profile of requirements, the method of competitive polygon, the method of assessing competitiveness based on the calculation of market share, the method of polar profiles, SWOT analysis method, SNW analysis method.
Results and conclusions
The following problems were identified by the well-known approaches acceptable for Russia's
competitiveness defining.
Indonesia 1,40%
Mexico l^M 1,40% Australia 1,73%
Spain - 1,73%
South Korea 1,95%
Russia 1,98%
Canada 2,07%
Brazil 2,46%
Italy 2,51%
India 3,28%
France 3,37%
Great Britain 3,38%
Germany 4,85%
Japan 5,94%
China 16,21%
USA 23,48%
0,00% 500% 10,00% 15,00% 20,00% 25,00%
Figure 3. Shares of the world's sixteen largest economies in world GDP (by nominal parity)
Source: The World Bank Databank. URl: https://databank.worldbank.org/
First, the deficiency problem. In accordance with the theory of equilibrium, an appropriate balance and combination of proportionality: production and consumption; resources and their use; supply and demand; production factors and their use; material and financial flows.
Second, according to the product quality assessment method, the next problem is the lack of a national quality philosophy (similar, for example, to the Japanese quality philosophy of CFN), which, unfortunately, is in conflict with the policy of state, state monopolies and quasi-monopolies in the domestic economy (i.e., the lack of competitive environment).
Third, in accordance with the competitive status approach, there is a lack of expenditure on science, which, in the transition from the fifth to the sixth technological order, could be used effectively to develop breakthrough technologies of the sixth technological order in the domestic economy. Also, it should be mentioned that R&D funds are poorly spent.
Fourth, using the effective competition theory approach, the problem of increasing Russia's national competitiveness is related to the low level of economic management technologies efficiency. That is why a method based on the effective competition theory implementation is ultimately based on the relationship between the sum of the properties and the total need for it; it is obvious that without adequate stimulation of consumer demand it is not possible to ensure the proper marketing of domestic products. Thus, the international economic competitiveness cannot be enhanced without an efficient process of increasing national import substitution.
Fifth, according to the method based on the requirements profile, it must be noted that when the domestic economy is dominated by quasi-monopolies and oligopolies, it is practically impossible to talk about the competitiveness of the key indicators in terms of: production cost-effectiveness, working capital management efficiency, marketing and promotion management efficiency, competitiveness of goods according to quality -price ratio.
Sixth, analyzing national competitiveness in terms of the methods of the competitive polygon, polar profiles and SNW - analysis, it must be noted that Russia is inferior to direct competitors in the ranking of international trade, that directly characterizes international economic competitiveness. However, Russia's low ranking in international trade is a consequence of the quasi-monopolies and oligopolies dominance in the national economy, and their prosperity in the national economy is the result of corruption, which confirms the high gap with closest competitors in property and economic protection ratings along with the high RF shadow economy level.
Seventh, if the method of competitiveness rating based on the calculation of market share and SWAT-
analysis are used, the Russia's share even among the sixteen largest economies of the world does not reach 2 percent. It is obvious we should search for (or create) special sectoral market niches where Russia can increase its competitive advantage. Indeed, the comparative advantage theory of D. Ricardo states the same. But using of this method (along with GAP-analysis tools, BCG matrices, Thompson and Strickland models, Mckinsey DPM models, PIMS-analysis models, PEST-analysis models, etc.) while determining the prospects for raising the Russian Federation national competitiveness showed the great inertia of domestic economy (i.e., returning to the problem of the growth rate), both in the development of new markets (spatial diversification) and in the creation of new products (structural changes). The most effective cooperative motion (according to the GAP analysis model): «New product, but concerned with existing - new market, but concerned with existing»
In general, the results of the initial components of national competitiveness assessment make it possible to determine the subsequent national competitiveness process components.
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© Alexey V. Tebekin, 2020
Received 28.08.2020
Accepted 01.10.2020
