Научная статья на тему 'REQUIREMENTS FOR IMPROVING THE PUBLIC PROCUREMENT SYSTEM OF THE EAEU COUNTRIES, CAUSED BY THE CHALLENGE OF IMPORT SUBSTITUTION'

REQUIREMENTS FOR IMPROVING THE PUBLIC PROCUREMENT SYSTEM OF THE EAEU COUNTRIES, CAUSED BY THE CHALLENGE OF IMPORT SUBSTITUTION Текст научной статьи по специальности «Экономика и бизнес»

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Ключевые слова
IMPROVEMENT NEEDS / PUBLIC PROCUREMENT SYSTEM / EAEU COUNTRIES / IMPORT SUBSTITUTION PROBLEMS

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Tebekin Alexey V., Zhigulin Vitaly G.

The article considers the problem of import substitution as a topical issue in the recent history of both Russia and other EAEU countries. The authors investigate dynamics of the average import ratios of EAEU exports in the period of the economic crises of 2008-2009 and 2020-2021. The implementation of a new approach to government and municipal procurement in the EAEU countries, caused by the potential of a common market space, would solve many important market problems, including the urgent practical problem of import substitution, exacerbated by Western sanctions. It allows formulate the conceptual proposals for solving the problem of import substitution in the field of information and communication technologies. The results of identifying the needs for improving the domestic public procurement system due to the urgent practical problem of import substitution allow to propose: scientific development of ICT tools on a competitive basis (procurement of scientific and technical products simultaneously from several suppliers, including enterprises of EAEU); science-based decision-making regarding the best ICT development option; production of ICT by several producers simultaneously (including enterprises of EAEU) with a possible rotation of producers.

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Текст научной работы на тему «REQUIREMENTS FOR IMPROVING THE PUBLIC PROCUREMENT SYSTEM OF THE EAEU COUNTRIES, CAUSED BY THE CHALLENGE OF IMPORT SUBSTITUTION»

Requirements for improving the public procurement system of the EAEU countries, caused by the challenge of import substitution

Alexey V. Tebekin

Doctor of Technical Sciences, Doctor of Economics, Professor

Moscow State Institute of International Relations (University) of the Ministry of Foreign Affairs of Russia, Moscow, Russia E-mail: tebekin@gmail.com

Vitaly G. Zhigulin

Applicant at the Customs Department of the Peoples' Friendship University of Russia Peoples' Friendship University of Russia, Moscow, Russia E-mail: ctek@bk.ru

Abstract. The article considers the problem of import substitution as a topical issue in the recent history of both Russia and other EAEU countries. The authors investigate dynamics of the average import ratios of EAEU exports in the period of the economic crises of 2008-2009 and 2020-2021. The implementation of a new approach to government and municipal procurement in the EAEU countries, caused by the potential of a common market space, would solve many important market problems, including the urgent practical problem of import substitution, exacerbated by Western sanctions. It allows formulate the conceptual proposals for solving the problem of import substitution in the field of information and communication technologies. The results of identifying the needs for improving the domestic public procurement system due to the urgent practical problem of import substitution allow to propose: scientific development of ICT tools on a competitive basis (procurement of scientific and technical products simultaneously from several suppliers, including enterprises of EAEU); science-based decision-making regarding the best ICT development option; production of ICT by several producers simultaneously (including enterprises of EAEU) with a possible rotation of producers.

Keywords: improvement needs, public procurement system, EAEU countries, import substitution problems.

JEL codes: C12, 00, О17

For citation: Alexey V. Tebekin & Vitaly G. Zhigulin, (2021). Requirements for improving the public procurement system of the EAEU countries, caused by the challenge of import substitution. Journal of regional and international competitiveness, 3(3), 31. https://doi.org/10.52957/27821927_2022_3_31

DOI: 10.52957/27821927_2022_3_31

Introduction

Keeping the USSR, and later Russia and many other post-Soviet countries, in the state of technological backwardness always was the one of the most important trends of the West's hybrid warfare against our country (Tebekin & Anisimov, 2020).

The results of "market reforms" of the 1990s (led by Western consultants), based on Rosstat data, are shown in Figure 1. According to them, the one of their primary objectives was the destruction of Russian domestic machine-building, including the manufacturing means. It leads to the country's automatically depending on imports.

We should note the successfully achieving of this objective by the "reformers". For example, in 1987 there were 10 union ministries of mechanical engineering, and there were several dozen union ministries of industry in the USSR. But nowadays in Russia there is still no single proper ministry of industry. The federal ministry in charge of industry is permanently a hybrid complex, merging alternately with energy and commerce.

When the sanctions pressure on Russia intensified, especially in 2014 and later in 2022, the problem of import substitution became even more acute.

This is particularly evident in the procedure of public procurement, where along with the traditional

© Alexey V. Tebekin, Vitaly G. Zhigulin, 2022

31

problem of corrupt collusion, the absence of real domestic competition is clear, as domestic industry declined for a long period of time. There are a lot of quasi-monopolies in many industry segments; in some segments there are no domestic manufacturers.

no 100

90 80 70 60 50 40 30 20

■V' V V "V V* "V' V V "V

Figure 1. Dynamics of the Russian Federation economic development in 1991-1999 (%, to the 1991 level)

Source: composed by authors

In this respect, we would like to consider inviting businesses from EAEU member states to participate in public procurement tenders in order to increase competition among manufacturers and ultimately stimulate import substitution processes.

Thus, the purpose of this study is to improve the public procurement system of the EAEU countries, caused by the import substitution problems on a competitive basis, accompanied by an increase in the range, quality and price of the products produced.

Methods

The study of the requirements for improving the system of public procurement of the EAEU countries due to the need to solve urgent practical problems of import substitution we study the scientific developments in this field, which are reflected in the works of Volkodavova & Zhabin (2016a; 2016b), Ershov (2015), Levchegov (2015), Mensa (2016), Moiseev, Nitsevich & Petrovichev (2015), Novikov & Somov (2016), Polovinkin & Fomichev (2019), Serikova (2015), Cherkasova (2015), Shuvalov (2015), Shcherbina (2016), etc.

The methodological basis of the research was also formed by the author's achievements on the topic of research reflected in the works (Tebekin, 2015; 2017; 2022).

Results

Import substitution is a crucial issue in the recent history of both Russia and other EAEU countries.

It is demonstrated by the export and import characteristics of the EAEU countries; the dynamics is presented in Table 1-5 and Figure 1-5 (TrendEconomy, 2022).

Table 1 - The export-to-import ratio in the foreign trade turnover of the Republic of Armenia in 2009-2020 (bn, USD)

Year Import Export The export-to-import ratio

2009 3.17 0.68 4.66

2010 3.78 1.01 3.74

2011 4.10 1.32 3.11

2012 4.26 1.42 3.00

2013 4.25 1.46 2.91

2014 4.15 1.49 2.78

Year Import Export The export-to-import ratio

2015 3.25 1.48 2.19

2016 3.21 1.80 1.78

2017 3.89 2.14 1.81

2018 4.84 2.38 2.03

2019 5.07 2.62 1.93

2020 4.56 2.51 1.81

Source: TrendEconomy, 2022

Table 2 - The export-to-import ratio in the foreign trade turnover of the Republic of Belarus in 2009-2020 (bn, USD)

Year Import Export The export-to-import ratio

2009 28.56 21.30 1.340845

2010 34.88 25.28 1.379747

2011 45.75 41.41 1.104806

2012 46.40 46.05 1.0076

2013 43.02 37.20 1.156452

2014 40.50 36.08 1.122506

2015 30.29 26.66 1.136159

2016 27.60 23.53 1.172971

2017 34.23 29.23 1.171057

2018 38.40 33.72 1.13879

2019 39.47 32.95 1.197876

2020 32.76 29.17 1.123072

Source: TrendEconomy, 2022

Table 3 - The export-to-import ratio in the foreign trade turnover of the Republic of Kazakhstan in 2009-2020 (bn, USD)

Year Import Export The export-to-import ratio

2009 28.40 43.19 0.65756

2010 24.02 57.24 0.419637

2011 38.01 88.10 0.431442

2012 44.53 92.28 0.482553

2013 48.80 84.69 0.576219

2014 41.29 79.45 0.519698

2015 30.56 45.95 0.665071

2016 25.17 36.77 0.684525

2017 29.59 48.50 0.610103

2018 33.65 61.10 0.550736

2019 38.35 57.72 0.664414

2020 38.08 46.94 0.811248

Source: TrendEconomy, 2022

Table 4 - The export-to-import ratio in the foreign trade turnover of the Republic of Kyrgyzstan in 2009-2020 (bn, USD)

Year Import Export The export-to-import ratio

2009 2.97 1.17 2.538462

2010 3.22 1.48 2.175676

2011 4.26 1.97 2.162437

2012 5.37 1.68 3.196429

2013 5.98 1.77 3.378531

2014 5.73 1.88 3.047872

2015 4.06 1.44 2.819444

2016 3.84 1.42 2.704225

2017 4.48 1.75 2.56

2018 5.29 1.83 2.89071

2019 4.98 1.98 2.515152

2020 3.38 1.86 1.817204

Source: TrendEconomy, 2022

Table 5 - The export-to-import ratio in the foreign trade turnover of the Russian Federation in 2009-2020 (bn, USD)

Year Import Export The export-to-import ratio

2009 170.82 301.79 0.566023

2010 228.91 397.06 0.576512

2011 306.09 516.99 0.592062

2012 316.19 524.76 0.602542

2013 314.94 527.26 0.597314

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2014 286.64 497.83 0.575779

2015 182.78 343.90 0.531492

2016 207.44 301.78 0.687388

2017 259.96 379.20 0.685549

2018 240.22 451.49 0.532061

2019 247.16 426.72 0.579209

2020 231.66 337.10 0.687214

Source: TrendEconomy, 2022

According to Tables 1-5 and Figures 1-5, the average import ratio of EAEU member countries (except Armenia) remained almost constant, varying by around 2% per year in the period between the economic crises of 2008-2009 and 2020-2021.

The implementation of a new approach to government and municipal procurement in the EAEU countries, caused by the potential of a common market space, would solve many important market problems, including the urgent practical problem of import substitution, exacerbated by Western sanctions.

For example, there is the import substitution problem for the EAEU countries in the field of information and communication technologies (ICT), which recognised as one of the key development areas in recent human history.

Figure 2. The export-to-import ratio dynamics in the foreign trade turnover of the Republic of Armenia in

2009-2020

Source: composed by authors

Figure 3. The export-to-import ratio dynamics in the foreign trade turnover of the Republic of Belarus in

2009-2020

Source: composed by authors

Figure 4. The export-to-import ratio dynamics in the foreign trade turnover of the Republic of Kazakhstan

in 2009-2020

Source: composed by authors

4

3,5 3 2,5 2 1,5 1 0,5 0

Figure 5. The export-to-import ratio dynamics in the foreign trade turnover of the Republic of Kyrgyzstan

in 2009-2020

Source: composed by authors 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0

Figure 6. The export-to-import ratio dynamics in the foreign trade turnover of the Russian Federation in

2009-2020

Source: composed by authors

We consider this problem on the example of the Russian Federation as the largest economic participant of the EAEU.

The share of imported equipment in strategic for the Russian Federation ICT sector reached 90% in the 1990s. Nowadays this dangerous for national security level unfortunately remains.

Obviously, the basis of import substitution for any state is the establishment of a strong domestic industry capable of saturating the national market with high-tech products of domestic production with high added value.

Since the mid-2010s the Ministry of Communications and Mass Media and the Ministry of Industry and Trade of the Russian Federation have been working on this task by implementation an import substitution plan for the radioelectronic industry.

The software import substitution programme supervised by the Ministry of Communications is divided into three regulatory blocks (Figure 6).

The software import substitution plan of the Ministry of Communications and Mass Media of the Russian Federation approved by Order No. 96 on 01.04.2015 included three blocks (Figure 7).

Figure 7. Blocks of the software import substitution programme overseen by the Ministry of Communications, separated by regulatory mechanism

Source: composed by authors

Figure 8. Software Import Substitution Plan Blocks, approved by Order of The Ministry of Communications and Mass Media of the Russian Federation No. 96 on 01.04.2015

Source: composed by authors

Figure 8 shows the planned dynamics of import reduction in the segments of the corporate software market for which there was a margin of competitive domestic products in 2014 - the preference of domestic

ICT products when procuring at public expense for the period until 2025.

Figure 9. Planned dynamics of import reduction in the segments of the corporate software market for which in 2014 there was a margin of competitive domestic products for the period until 2025

Source: composed by authors

Figure 10. Planned dynamics of import reduction in the segments of the corporate software market for which in 2014 there was not a margin of competitive domestic products for the period until 2025

Source: composed by authors

Figure 9 shows the planned dynamics of import reduction in the segments of the corporate software market for which in 2014 there was not a margin of competitive domestic products - support for collaborative software development for the period until 2025.

Figure 10 shows the projected decline of imports volume in the industry-specific segments of the software market in the period 2014-2025.

100

12014

2020

2025

-\V

jy

.0

dp

y

Figure 11. The projected decline of imports volume in the industry-specific segments of the software

market in the period 2014-2025

Source: composed by authors

When commenting on this problem, that time the Head of the Russian government Dmitry Medvedev said that import substitution "is not a situational short-term event, but... a strategic direction of work for the coming years outside the context of all kinds of sanctions" (RIA News, 2015).

It should be mentioned that this statement was made seven years before the West imposed anti-Russian sanctions in 2022.

According to Dmitry Medvedev, to 2015 year a rather diverse ("although not comprehensive") set of instruments of state support for import substitution had been formed: subsidies, co-financing of research, grants, preferences in public procurement.

At a meeting of the Russian Government on 3 April 2015 on the issue of ensuring the implementation of sectoral import substitution programmes, Medvedev also noted that: "The import substitution course must take into account both our interests above all and our international obligations. And, of course, to take into account the co-operative links we have developed with our partners who have already invested in our industry, agriculture and used modern technology".

Import substitution programmes for industry, energy, agriculture and software were adopted in 2015 in accordance with point 41 of the 2015 "crisis bailout plan" of the Russian Government.

According to paragraph 41 ofthe "crisis bailout plan", aimed at approving and ensuring the implementation of sectoral import substitution programmes (plans), the expected result was "the formation of favourable conditions for the development of production of Russian competitive products in priority sectors".

Unfortunately, the phrasing of the expected outcome of the "crisis bailout plan" item on import substitution (as well as the other items of the plan) was extremely imprecise.

An assessment of the implementation of the 2015 crisis bailout plan made by representatives of the Court of Audit clearly showed (Figure 12) (Tebekin & Zhigulin, 2016) the poor implementation of this plan that not much more than a quarter of the plan was fully implemented.

Partially completed 50%

Figure 12. An assessment of the implementation of the 2015 crisis bailout plan made by representatives of

the Court of Audit (on 1 January 2016)

Source: composed by authors

Of course, such a result of the implementation of the Priority Action Plan for Sustainable Economic Development and Social Stability in 2015 could not provide the solving of import substitution problem.

On the other hand, if we try to compare the Russian government's views on the problem of import substitution in the 2010s with those of the 1990s under the conventional motto "let's pour all the problems by petrodollars", they have clearly been progressive, primarily in their assumptions. The course towards filling market with Russian goods become completely correspond to the national interest of the Russian Federation.

The Russian government's import substitution policy of the 2010s is undoubtedly constructive from a goal-setting point of view. This refers to the tasks:

- reducing the economy's dependence on raw materials,

- increasing the volume of higher value-added products (increasing the share of higher value-added products),

- approving a state programme of import substitution for the industrial and agricultural sectors. Despite the fact that by 2015 the Russian Government believed that "a sufficiently diverse (although not

comprehensive) set of instruments of state support for import substitution had been formed" (Figure 13). In practice, the mechanisms of their use have not worked properly. The modern situation clearly shows that the improvement of the public and municipal procurement systems of the EAEU countries can be considered as a valid mechanism.

Figure 13. A set of instruments of state support for import substitution processes

Source: composed by authors

However, imports continue to dominate many key sectors of the Russian economy (Figure 14).

Figure 14. Share of imports in key sectors of the Russian economy in 2022

Source: composed by authors

In this regard, on the one hand, we can note a conscious choice of decisions regarding import substitution made by Russia, including

delegating of some responsibilities to the EAEU supranational level on trade policy, customs and tariffs, and technical regulation of import substitution.

On the other hand, there are imperfect conditions for the market development of free competition of domestic companies dealing with the problem of import substitution.

For example, by the Ministry of Economic Development estimates, the state companies purchased goods and services worth RUB 23.1 trillion in 2015 under 223-FZ. However, the five largest players, led by Rosneft and Gazprom, consumed 70% of this amount (Figure 15).

Figure 15. Example of distribution of 223-FZ procurement by customer in 2015

Source: composed by authors

However, the volume of Rosneft's procurements under 223-FZ alone (RUB 4.6 trillion) is comparable to the total volume of state purchases made in 2015 under 44-FZ.

But there are no progress in the distribution of 223-FZ procurement across customers in terms of unequal volumes over the last seven years (2015 to 2021).

Thus, the volume of purchases made under FZ-223 by the Renovation Fund (Moscow) according to the initial guaranteed maximal price (GMP) in 2021 (5.6 trillion rubles) exceeded the total volume of purchases by nine other participants, which were included in the T0P-10 by this indicator (Table 6) (Analysis of the Russian procurement market, 2021).

Table 6 - Top 10 customers by total amount of GMP under 223-FZ in the Russian Federation in 2021

Customer Customers INN Customers KPP Volume of purchases made under FZ-223

Renovation Fund, Moscow 7703434808 771001001 5 590 255 422 255,12

JSC Russian Railways, Moscow 7708503727 770801001 1 130 332 628 182,73

JSC Centralnaya PPK, Moscow 7705705370 770501001 504 737 281 311,47

OOO Gazprom komplektatsiya, St. Petersburg 7740000044 781001001 407 513 584 724,17

PJSC Aeroflot, Moscow State Unitary Enterprise Ecotehprom, Moscow 7712040126 770401001 247 133 880 589,69

PJSC Aeroflot, Moscow 7706043312 770601001 231 286 716 640,08

FSUE Atomflot, Murmansk Region 5192110268 519001001 205 334 612 917,04

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PJSC FSK UES, Moscow 4716016979 772801001 182 308 139 324,53

PJSC Kuzbassenergo, Kemerovo Region 4200000333 420501001 124 460 862 542,05

JSC Moslnzhproekt, Moscow 7701885820 770101001 117 268 231946,59

Source: Analysis of the Russian procurement market, 2021

According to the Ministry of Economic Development, 95% of procurements in the Russian Federation are non-competitive; the half of them were placed by a single supplier only.

The Ministry of Economic Development of Russia in its assessments also concerns about:

1) contractual nature of deals,

2) unreliable character of the customers information,

3) small businesses reduced interest in supplying goods and services to state-owned companies.

Similar problems in ensuring proper competition in public procurement are experienced by other

EAEU countries (Amelchenya, 2020): Republic of Armenia, Republic of Belarus, Republic of Kazakhstan, Republic of Kyrgyzstan (Moskalievich, 2019; Khamitov & Junusbekova, 2021; Abdukarimova, 2020).

This also highlight the need to improve the system of public and municipal procurement of the EAEU countries in the single market space.

Figure 16 shows the possible solutions to the import substitution problem.

The intermediate option "state regulation + free market", which is the most common in world practice, is the most preferable of those presented in Figure 16. By it, developed countries have tended to reduce government regulation while increasing the share of the free market. This is a rather radical step for the existing domestic system of state capitalism and other EAEU countries. However, the "critical mass" (share) of state regulation of all developed countries is limited in order to maintain control over the market situation and avoid the negative effects of a free market on national security.

The dynamics of import substitution levels requiring implementation of the strategic development perspective of the national economy. Figure 17 shows it in the IT field.

Figure 16. The possible solutions to the import substitution problem

Source: composed by authors

Completely ¡imported

equipment

Import of components, domestic assembly

Completely

domestic equipment

Completely imported Hybrid software Completely domestic

software software

Completely imported Hybrid algorithms Completely domestic

algorithms algorithms

Figure 17. An example of a model of the dynamics of import substitution levels requiring implementation in the IT field in the strategic perspective of the national economy

Source: composed by authors

To achieve the required level of import substitution, it seems appropriate to implement the following measures of state support for the development of domestic information and communication technologies in the public procurement system as a strategic direction of national economic development (Figure 18).

The problems of import substitution in the IT include the registration of business abroad by many well-known companies of Russia.

This is clearly indicate the absence of a business-friendly environment for IT. What are the possible solutions to the problem of import substitution in the IT field? Three vectors could be defined.

The first vector is related to I. Ansoff's identification of the company's strategic business areas (SBAs) in terms of strategic management (Figure 19) (Ansoff, 1989).

Nowadays IT field is SBA for any modern company and the national economy as a whole. The second vector relates to the designation of special (free) economic zones (SFEZs). In particular, these are functional FEZs, in which incentives are granted for specific activities.

The third vector relates to the expansion of the public procurement zone into the EAEU states in the

interest of increasing competition for businesses.

Figure 18. Appropriate measures of state support for the development of domestic IT field in the public procurement system as a strategic direction of national economic development by extending the public

procurement system for the EAEU countries

Source: composed by authors Discussion

According to the identified analogies, we propose the following ways to solve the problem of import substitution in the IT field.

Firstly, the identification of IT field as an area of strategic management (SBA).

Secondly, the provision of tax incentives and preferences to domestic manufacturers in IT field within special economic zones (SFEZs) of the technology-innovative and industrial-production type.

Thirdly, domestic developments and productions (including public procurement) should be implemented in a competitive environment within the EAEU common economic space, taking into account the life cycle stages of various types of information and communication technology products.

According to Gordon Moore's law, the production technology is updated every 18 months for

telecommunications and a number of other technologies (pharmaceutical, chemical, electronic, aerospace, computer, biotechnology, etc.).

Figure 19. The basis for the formation of SBAs

Source: Ansoff, 1989

But the necessity to procure updated technologies, taking into account the stages of their life cycles in the common economic space of the EAEU does not only concern IT field, but refers to the need to improve the entire domestic system of public procurement, due to the urgent practical problem of import substitution (Table 7).

Table 7 - Relating public procurement to product lifecycle types, demonstrating the realisation of the needs

for improving the domestic public procurement system

Type of cycle Working titles of the cycle Cycle time Main features Reasonable public procurement

G. Moore's cycles Renewal cycle of promising technologies 0.75-1.5 years Qualitative (multiple) changes in a particular technology Procurement of high-tech products (e.g. in IT field)

J. Kitchin's business cycles Business cycles, short-term cycles 2-4 years Inventory levels, GNP fluctuations, inflation, employment, business cycles Procurement of necessary products generated by projects corresponding to short-term business cycles

Small cycles of economic activity by C. Juglar Business (industrial) cycles 7-12 years The investment cycle, GNP fluctuations, inflation and employment Procurement of necessary products generated by projects and programmes by business cycles

Average cycles of economic activity by S. Kuznets Investment (construction) cycles 16-25 years Income - immigration - housing - aggregate demand - income Procurement of necessary products and infrastructure built under programmes by investment cycles

Type of cycle Working titles of the cycle Cycle time Main features Reasonable public procurement

Great cycles of economic activity by N.D. Kondratiev Long technological (opportunistic) cycles 40-60 years Technical progress, structural change Procurement of technologies, determining the development prospects of the current (future) technological stage

Century waves of F. Brodel Material civilisation 100-150 years Trends of material civilisation structures Procurement of technology, determining the trends of the material development structures of society within the existing civilisation

J. Forrester's resource cycles Civilisation cycles 200 years Energy and materials Procurement of technology, determining the long-term prospects for solving energy and resource conservation problems

E. Toffler's cycles Cycles-epochs 10002000 years Development of civilisations Agricultural, industrial and post-industrial civilisations

Source: composed by authors

Considering the life cycle of any product (Table 8), including those created on the basis of IT, we should note the mainly involvment of domestic companies in implementing stages 1-5 (more often 1-3) and 10-12 (more often 11-12) of the product life cycle.

Table 8 - Stages in the life cycle of the developed product

Name Content

The emergence of an idea Techno-economic assessment of the feasibility and effectiveness of an idea (business planning)

Search of the resources to implement the idea The search for the necessary raw materials, real estate, technology and equipment to implement them, skilled labour and, ultimately, finance

Layout design Implementation of the R&D phase with mathematical and physical modelling of new products

Prototype development The implementation of the development phase with the manufacture of a trial batch of products, the tests of which result in the formation of standard documentation (design, technological), which will be used in series production

Production of a trial batch The start of series production, accompanied by the testing of production technology, the study of consumer reactions to the products offered and the corresponding adjustments to the regulatory documentation

Start of series production, Serial production, accompanied by an increase in production volumes and the emergence of profits from their sale

Reaching the payback point Rapid growth of production and sales volumes, generating a profit sufficient to cover all previous costs

Continuation of growth Continuing growth of production volumes and expansion of the market for the sale of products

Growth retardation Growth retardation of production and sales volume caused by the moral ageing of products, increased competition and saturation" of the market with the products offered

Growth stop The market saturation of the products, corresponding to an equality of supply and constant demand. The results of the functional-cost analysis, however, continue to show an increase of sales profit

Decline Demand for ageing products is falling. All investment in improving these products stops as the need for new products becomes evident. At the same time it solves the problem of replacing production with newer products and the gradual dismantling and sale to less demanding markets of production rights and related equipment for ageing products

End of life cycle Discontinuation of ageing products once production volumes and profits from the sale of these products have reached minimum thresholds

Source: Tebekin, 2020

Russian companies and specialists are most active at stages 1 and 3 of the product life cycle (Table 8), as evidenced by the demand for Russian intellectual product specialists around the world, which is reflected in the continuing outflow of scientific personnel. Attempts of domestic industry to reproduce the most popular products in the world (stage 10) lead to its development it already becomes ageing during the time and corresponds to the stage 11 of the life cycle.

In addition, the problem of import substitution in IT field is compounded by the procurement problems outlined above. In addition, the duration of procurement procedures is increasingly approaching the length of the shrinking life cycle of products by Moore's Law.

Conclusions

Thus, as conceptual proposals for solving the problem of import substitution in the ICT field it seems appropriate to propose:

- scientific development of ICT tools on a competitive basis (procurement of scientific and technical products simultaneously from several suppliers, including enterprises of EAEU);

- science-based decision-making regarding the best ICT development option;

- production of ICT by several producers simultaneously (including enterprises of EAEU) with a possible rotation of producers.

Overall, the results of identifying the needs for improving the domestic public procurement system due to the urgent practical problem of import substitution allow to provide a more detailed analysis of global experience and economic implications in the creation of economic alliances in public procurement.

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Received 10.08.2022

Revised 12.09.2022

Accepted 15.09.2022

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