journal of european economy

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December
2011
JOURNAL
OF EUROPEAN
ECONOMY
ISSN 1684-906X
The journal is listed in the Supreme
Attestation Commission’s
register of specialized publications
in economic sciences
(Resolution №1-05/6 of 12.06.2002
of the SAC of Ukraine)
Vol. 10 (№ 4). December 2011
Publication of Ternopil National Economic University
Rector – Serhiy Yuriy
Recommended for publication
by the TNEU Research Council
(Protocol № 4 of 29.12.2011)
International Economy
Nataliia KRAVCHUK
353 GEOPOLITIC IMPERATIVES FOR GLOBAL DEVELOPMENT ASYMMETRIES
(Translated by Demchenko H.)
383
Ikram Ismail Ohly DZHABRAILOV
REGIONAL ECONOMIC POLICY OF AZERBAIJAN AND NAKHCHIVAN
(Translated by Zharovska O.)
Halyna MARKOVSKA
391
REGULATORY CONSIDERATIONS OF MIGRATION FLOWS WITHIN
THE FRAMEWORK OF EU-15 AND COMMON MIGRATION POLICY
OF EUROPEAN UNION
Viktor HERASYMENKO, Svitlana HALASIUK
402 LICENSING OF THE TOURIST ACTIVITY IN UKRAINE WITHIN THE CONTEXT
OF THE INTERNATIONAL PRACTICE
(Translated by Manka N.)
Macroeconomics
Oleksandr KRUTYLKO
415 MAIN TRENDS OF IMPROVEMENT OF INVESTMENT ATTRACTIVENESS
OF UKRAINE’S ECONOMY
Microeconomics
Aspasia VLACHVEI
425 FACTORS INFLUENCING CONSUMERS’ BEHAVIOR ON WINE CONSUMPTION:
A LITERATURE REVIEW
Nataliia ZARUDNA
444 MODERN REQUIREMENTS FOR ACCOUNTING MANAGEMENT
FOR PROVISION PROCESS
(Translated by Manka N.)
Volodymyr MAZUR, Nataliia MAZUR
454 ENTERPRISE COMPETITIVENESS: EXPERIENCE OF THE DISTILLARY INDUSTRY
460
«JOURNAL OF EUROPEAN ECONOMY» IN 2011
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JOUR NAL
OF EU ROPEAN ECO NOMY
353
Vol. 10 (№ 4). December 2011
P ub l i c a t i o n
o f
Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
Nataliia KRAVCHUK
GEOPOLITIC IMPERATIVES
FOR GLOBAL DEVELOPMENT ASYMMETRIES
Abstract
The paper is concentrated on functional determinants of category – conceptual apparatus within the tandem of «geo-political imperatives – asymmetry of
global development» The author generalized theoretical and conceptual principles of ideological paradigms of geo-politics, and offered retrospectiveconceptual classification of fundamental political and philosophical basics of geopolitics (according to academic schools). The matrix of geo-political imperatives
of global development asymmetries is constructed. Also the geo-political pragmatism is revealed, and theoretical and methodological constructions are argued for
modern innovative civilization geo-politics. Following from the extrapolation of international methodological concept of Stanley Hoffmann the paper analyses
asymmetries of global development in horizontal, vertical, functional, and ideological dimensions.
Key words:
Asymmetries of global development, classic geopolitics, geo-economics,
civilizational geo-politics, geo-political imperatives, spatial expansion, geographic
determinism, geo-political dualism, geo-political code, geo-political vectors, geo© Nataliia Kravchuk, 2011.
Kravchuk Nataliia, Candidate of Economic Science, Assistant Professor, Ternopil National Economic
University, Ukraine.
N a t a l i i a
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K r a v c h u k
Geopolitic Imperatives
for Global Development Asymmetries
political strategy, concepts-anti-theses, geo-political pragmatism, geo-political
idealism, horizontal, vertical, functional, and ideological dimensions of global development asymmetries.
JEL: O10.
The World Map, but geography,
during much of the human history was
determined by wars and politics.
Grzegorz Kolodko [18, p. 64]
Globalization means in practice beginning of the spatial reorganization of the
world while maintaining its political and
territorial division.
Mykola Kosolapov [19, с. 11–12]
1. Asymmetries of Global Development
refuse from traditional theoretical patterns
of industrial society
In publications on asymmetries of global development the most frequent
topics are about «the set absence of structural balance of global economic system» and «disproportional development of subsystems and elements of world
economy [2, p. 31], that are revealed in «…a quantitative imbalance of major
economic proportions in global scale», and in «...discrepancy between tangible
composition of social product and its value» [27, pp. 38–39]. The research papers are also dedicated to vis major of unregulated global market [12; 20; 26],
likewise to endless series of financial imbalances having been occurred within
some dozens of years in global economy [3–4; 11; 16; 21; 32–34; 36–37] All that
is understandable and in general is justified, though with certain significant additions. All those notions are referred to as traditional scheme of scientific canons
of industrial society where the system of political, social, psychological, moral,
and ethic relations is determined as economic (tangible). Today the inadequacy
of that interrelation is becoming more and more obvious. In post-industrial society
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there occurs deep integration of material and spiritual, their combination into a
qualitatively new as against the industrialism epoch, structural integrity. In the
context of these fundamental transformations it is worth reviewing nature and
core reasons of global development asymmetries, since they take both tangible
(distortions of quantitative and value proportions), and intangible (subjectively
value) (heterogeneity of socio-cultural environment) forms, and in the aggregate
they condition aggravation of geopolitical and inter-civilization asymmetries
Coining this author’s view to the reader’s opinion of logic for search of
cause-effect relationships in the tandem of "geopolitical imperatives and the
asymmetry of global development," we set ourselves the task of substantiating
an integrated system of theoretical and methodological approaches to the disclosure of the nature of geopolitics as a scientific discipline or, say, science in the
broadest sense. We do not mean the applied geopolitics to be a state doctrine.
The core of this given research constitutes ideas, concepts, theories, models,
which formulate the fundamental political and philosophic basics of the essence
of geo-politics and geopolitical imperatives, on the basis of which the «geopolitical terrain" of global space is formed.
Ideological origins
of the geopolitics paradigm
Essential aspects of the research of global development are in geopolitics,
that together with general methodological approaches (global system-wise)
(Samir Amin (date of birth – 1931), Fernand Braudel (1902–1985) E. Wallerstein
(1930), Yohan Galstung (1930), and others,, and civilization-wise (Mykola
Danylevskyi (1822-1885), Oswald Spengler (1880-1936), Arnold Toynbee (1889–
1975), Karl Jaspers (1883–1969), Alvin Toffler (1928), Samuel Huntington
(1927–2008), Oleksandr Neklesa (1949), and others make a specific continuum
for the formation of that knowledge components that are connected with the
statehood and national sovereignty, geopolitical distribution of spheres of influence and the system of world order, standards of international right and «world
order» in the global area. Apart from all the disputable theoretical and methodological positions and even some contradictions which take place in the researches of many representatives of geopolitical schools (see table 1) respectively the definition of «geopolitics» as such, the subject of this science and primary basic methodological principles, it is worth noting that German classical
geopolitics (Friedrich Ratzel (1844–1904); Rudolf Kjelen (1864–1922); Karl
Haushoffer (1869–1946) on the ideologic-theoretical level actually do not differ
from Anglo-Saxon geopolitics (Adolf Mehen (1840-1914), Helford John Mackinder (1861–1947), Nicholas J. Spykman (1893–1943) and French (Paul Vidal de
la Blache (1845–1918), and others. All of them make a single world outlook
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paradigm based on the dominating in the certain historical epoch ideology and
revealing the conditionality of demarkation line that separates the expansionistic
character of strategic policy of ruling elites from the irrational forms of achieving
1
power by them in the world scale . In spite of the fact, that the «militant» geopolitics compromized itself before the world community, its problems symptomatically are the intrinsic realities from which it is impossible to abstract away.
Table 1
Eventually-intellectual chronology and retrospective-conceptual
summarizing of fundamental political and philosophical basics
of classical geopolitics (after scholar schools)
Leading
representatives
Friedrich Ratzel
(1844–1904)
Rudolf Kjellen
(1864–1922)
Karl Haushoffer
(1869–1946)
1
Ideological and theoretical dominants
of conceptual approaches
German school
The main ideological and theoretical dominant of geopolitical
views, i. e. attitude towards the state as towards «alive, spatial, rooted in the l ground organism», was formulated in the
research under the title of «Political Geography» (1897). The
scientist considered the spatial state expansion a natural
process (big countries are tended to maximal geographic expansion that gradually passes to planetary level). He formulated the principle theses (laws of geopolitical expansion),
which made the basics of classical geopolitics; and geopolitical concept of «global state»
Coined the notion of «geopolitics», implying «the science about
the state as a geographic organism that is embodied in space»
in his treatise «The State as a Living Form» (1916); formulated
the idea of «continental state» according to which Germany
has to become a continental state of planetary scale
Developed the theory of «planetary dualism» i. e. combat between «thalassocratia» (marine powers) and «tellurocratia»
(continental powers), and on this basis developed the variant
of eurasianism, that is, the military doctrine of «Continental
block (ally)», of so called axis: Berlin–Moscow–Tokyo as a
All those concepts originated before the World Wars I and II, and therefore they are
described with clear expansionism; the named geopolititions considered the main aims of
their countries to be a fatal necessity of teritorial invasions, since «the space of the divided
world could be conquered by one country from another one only with weapon» Therefore
that science for a long time (specifically in the post-Soviet space) was taken for «a
bourgeois pseudoscience» See [23, pp. 7–15].
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Leading
representatives
Paul Vidal
de la Blache
(1845–1918)
Adolf Mehen
(1840–1914)
Helford John
Mackinder
(1861–1947)
balance to Anglo-Saxon world of British Empire and the USA.
The ideological basics of this theory.became the official state
doctrine of German fascism in geopolitical opposition to the
Anglo-Saxon world in fight for the «living space (Lebensraum)» Main works: «Borders in their Geographic and Political Meaning» (1927), «Continental Block: Central EuropeEurasia-Japan» (1941).
French school
Founder of geopolitical concept, that the political history has
two following aspects: geographic (the principles of foreign
policy of the state depend on its geographical conditions – so
called «geographic determinism»), and historic (the leading
role in activating space belongs to a man, who is not «a decoration fragment in the historic theatre, but the protagonist of
the play»). The main theoretical works of the scientist are
generalized in the book «Principles of Human Geography»
(1922) under edition of Е. Marton.
Anglo-Saxon school
Founder of geopolitical concept of modern Atlanticism and
the doctrine of «sea power». According to this doctrine modern Atlanticism is a special – type of civilization – the best and
most effective («sea power» is based on «freedom of maritime trade», and the main peril for «maritime civilization» of
the U.S .are continental states of Eurasia – Russia, and
China). The main tool is the trade policy, which aims to create
a planetary civilization trade. It was through the conquest of
foreign markets the state provides its power and its economic
impact in the world. The basic works are the following: «Naval
forces in the history of 1660–1783» (1890), «Interest of America in sea power, present and future» (1890–1897).
Coined the term «heartland» in 1904 in his treatise «Geographic Axis of History», where he argued that that is the central part of the Eurasian continent (territorially and geographically it is Russia, that takes the central strategic position in
the world), it is surrounded by internal arc (Europe – Arabia –
Indochina) and periphery arc (America – Africa – Oceania). In
his work «Democratic Ideals and Reality» (1919) Mackinder
formulated his ideas like the following: «Who rules the East
Europe, he owns the Heartland, who rules the Heartland, he
owns the World Island, and who rules the World Island, he
owns the World»
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Leading
representatives
Nicholas Spykman
(1893-1943)
Viewed geopolitics as the most critical instrument of international policy, and effective strategy. Coined the notion «Middle Ocean» (Atlantic), the both shores of which- American
and European – are the arsenal of the most advanced in
technologic and economic respect Western civilization. The
nerve center and mechanism of the Atlantic cooperation is
the U.S. with its military-industrial and trade complex. Europe
is a mental appendage of the United States. Its states have
no that geopolitical power, therefore their sovereignty has to
weaken, and political power should pass to a special institution, which will bring together representatives of all the Atlantic area and wil be subject to the U.S. (that is, in early 40-ies
of the 20th century. Spykman predicted the most important
political processes and their consequences, like creation of
the NATO and weakening of the sovereignty of the European
states). In his scientific work «American Strategy in World
Politics» (1942) he determined ten criteria of geopolitical
power of states.
The table shows one of many probable variants of the formation of fundamental (initial)
political and philosophical basics of geopolitics after the scholar schools and the most
known personalities in this area.
Generalized by the author [14, pp. 3–4; 23, pp.7–15].
At the moment the traditonal intentions of classical geopolitics oriented at
struggle for the countries and their allies’ right to exist, are accompanied with the
search of the ways and means for reaching the agreed development of the world
community (geoeconomics and civilized geopolitics). That context enables to
speak about a specific status of geopolitics as a peculiar outlook, and at the
same time, as a philosophy, science and art of pursuing policy through «geographic mind» accounting for the intrinsic necessity to correct imbalance in the
interests and psychology of ruling elites.
In the world outlook sense geopolitics reflects the vision of ruling elites,
their attitude towards ideological imperatives in the system of international relations. As Oleksandr Duhin aptly said, «…geography and space have in the geopolitics the same functions as money and production relations have in Marxism
and liberalism. In Duhin’s opinion, they include all fundamental aspects of human
being, implying the basic method of interpretation of the past; also they are the
key factors of human being through arranging other sides of the latter. Duhin
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considers that like in case of ideologies, geopolitics is based on…reductionism,
i. e. reducing of various forms of life to several parameters (imperatives – N. K.),
but in spite of the known error usually pertaining to such theories, it aptly proves
its harmony with reference to the past, and the greatest efficiency in the design of
present and future»[14, pp. 3–4]. Thus, geopolitics is a philosophy in the sense of
structures, mechanisms, instruments, through which the ruling elite tries to divide
«zones of influence», «zones of safety» «zones of national interests», etc., and
in that way to get power.
In traditional sense, geopilitics as a science is a state doctrine (teaching,
system of theoretically substantiated views on essentially important ideological,
axiological, statehood, social and political, social and economic, and other maxims) based on particular historic forms of the territorial –spatial conditions’ influence produced on building of its status and policy in regional, continental and
global aspects. In other words, geopolitics is a science about government and for
government (governing elite).
The art of geopolitics differs from science in a way, that the art is a successful, creative, efficient combination of international politics and the implementation of international and national strategies in global space accounting for strategic thinking and realization of global social-historic and civilizational regularities
of its development
Geopolitics on heuristic level is usually taken for an abstraction. Nevertheless, proceeding from the scientific literature on that issue, one can be convinced
that the geopolitics «…too plainly demonstrates the fundamental mechanisms
(imperatives – N. K.) of international politics, that different regimes often seek to
hide under vague rhetoric or abstract ideological scemes … geopolitics exposes
the historical demagogy of foreign policy discourse, showing real deep levers that
affect the international, inter-state relations» [14, pp. 1–2].
3. Geopolitical imperatives
The economic researches are tended to ignore, or rather negate the promordial postulates of geopolitics like geographical determinism, geopolitical dualism, competition of strategies, civilizational differentiation, and so, that provide a
kind of geopolitical imperatives of global development asymmetry (table 2).
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Table 2
Matrix of geopolitical imperatives of global development asymmetries
Geopolitical imperatives and interpretation of key dominants
New (economic)
Traditional (classic)
Innovative civilizational
geopolitics
geopolitics
geopolitics
(geoeconomics)
th
th
st
(late 19 – first half
(late 20 – early 21
(second half
th
of the 20 century.)
century)
th
of the20 century)
Geopolitics – a science on the regularities of distribution and redistribution of
spheres of influence (centers of power) among different states and inter-state allies in multidimensional geospace
Maxims
The space of the divided To reach foreign political We define the world in
world can be regained by aims, global or regional
dependence with one or
one country from another «might» is possible exanother combination
clusively via economy.
form of space. The space
one specifically with
weapon
of different nature would
origin a different world
1. Spatial expansion
(ideal basics of geopolitics that implies the aspiration
to control expansion over the space)
Represents international
relations as the expanrelations as expansion of relations as a consolidatsion of «living space»
«zone of influence»,
ing project of the future
through the coercive re«zone of national intermultidimensional geolations.
ests», «security zone»
space that is based on
through economic might; the agreed values (varigrounds achievements of ous values origin contraworld domination through dictions and conflicts of
interests, and intereconomic wars.
civilization conflicts).
2. Geographic determinism
(principles of foreign policy of the state depend on its geographical conditions)
Simplified representation Combines geographical
Combines geographical
of states depending on
factors (peculiarities of
factors with other geopolitical dominants («Brzeznatural and geographical climate and landscape;
inski geopolitical pluralconditions (geographical
availability of water and
ism», and reveals connecfatalism)
land routes; mineral resources, etc.) with geotion between political
graphical dominants (eco- processes and social connomical might) («ecostants (economics, culnomic determinism»).
ture, spirituality, etc.),
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New (economic)
geopolitics
geopolitics
geopolitics
(geoeconomics)
th
th
st
(second half
th
of the 20 century.)
century)
th
of the20 century)
which had been created
for many centuries by
dominating ethnos
throughout the particular
territory.
3. Geopolitical dualism
(foreign policy of the state is based on the fundamental dualism reflected
in geographical structure of the planet and historical typologyzation
of civilizations)
The basics of the spatial
The basics of geoThe basics of the formaexpansion policy make
economical expansion
tion of geopolitical relathe theory of «planetary
makes the theory of irtions makes the theory of
dualism, fight between
regularities of global
inter-civilizational rela«sea and land»: powers
economic development
tions, choice between
(К. Haushofer); doctrine
expressed in the conoppositions, conflicts and
of «sea powers»
cepts –antitheses –
threat of civilizations’ col«North-South, Center(А. Mehen).
lisions on the one side,
Periphery» which deand their dialogue and
scribe the poles, of milipartnership in meeting
the global problems of the
tary and political might
st
21 century on the other.
4. Theories and concepts of geopolitics
(formulate theoretic and conceptual basics
of world order transformation (geopolitical structure of the world),
determine geopolitical codes and geopolitical vectors of states)
1. Concept of «geo1. Theory of «zone of vi1. Concept of «multidigraphic axis of history»
tal interests»;
mensional communica(H. J. Mackinder);
2. Theory of «dependent tion space»;
2. Concept of «world
development» (S. Amin); 2. Concept of «conflicts
state»
of civilizations»
3. Theory of «worlds of
economies» (F. Braudel); (S. Huntington)
4. «World-system» the3. Concept of «mondialory (I. Wallerstein)
ism» in the theory of
convergence (Z. Brzezinski, J. Attali);
4. Concept of «cycles
of world hegemony»
(I. Wallerstein);
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N a t a l i i a
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New (economic)
geopolitics
geopolitics
geopolitics
(geoeconomics)
th
th
st
(second half
th
of the 20 century.)
century)
th
of the20 century)
5. Concept of «cycles of
global leadership»
(G. Modelski,
W. Thompson);
6. Futurological concept
(K. Santoro).
5. Geopolitical code
(multi-vector system of political relations between the state and the ROW,
that is historically based on the balance of national interests, and provides
the certain status to the state at global, regional and local levels)
Multi-vector system of
Multi-vector system of
Civilizational geopolitics
political relations beeconomic relations beas oppose to geographic
and economic determintween the state and the
tween the state and the
ROW, that historically is
ROW (including internaism of classical geopolibased on the policy of
tional and corporate distics and geoeconomics,
spatial expansion and
tribution of labor)
expands the set of basic
geopolitical might of the
grounded on the balance factors determining the
state.
of national economic inbehavior of geopolitical
terests and ensurering
actors in the global
the competitive positions space (cultural values,
of the state at global, recustoms and traditions,
formal and informal rules
gional and local levels.
(institutes) are meant).
6. Geopolitical vectors
(geostrategic lines of foreign policy of the state at global,
regional and local levels, based on its geopolitical code)
Geopolitical vectors are
Geoeconomic vectors
Geopolitical vectors are
viewed as vectors of coare viewed as main lines viewed in the context of
ercive (militaryin the policy of distribuconsolidating project of
political)influence the
tion and redistribution of
future multi-dimensional
state or bloc of states
resources and world ingeo-space, where politiproduce on the ROW
come (geoeconomic
cal culture together with
rent)
socio-humanitarian values will enable to overcome the transformation
chaos in a global socium
and chart the strategic
vectors of geo-
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New (economic)
geopolitics
geopolitics
geopolitics
(geoeconomics)
th
th
st
(second half
th
of the 20 century.)
century)
th
of the20 century)
civilizational development.
7. Geopolitical strategy
(substantiated geopolitical direction of the state activity
at the international arena based on egoistic and pragmatic interests of the state)
Geopolitical strategy is
Geo-economical strategy Geo-strategy is viewed
viewed as the expansion is viewed as an art for
as an art for strategic
of the area of influence
meeting the economic
management of geopoof the state or block of
objectives and implelitical processes
(Z. Brzezinski, 1999)
states as a result of geo- mentation of economic
political expansion
interests on global market; likewise prevention
of potential conflicts
*
Generalized and constructed by the author.
In the context of shown in table 2 theoretical and methodological generalizations, it is worth paying attention to the key definition of «imperative». Etymologically, imperative (in translation from Latin imperatives) means authoritative,
commanding. But philosophical meaning of this definition is a universal obligatory
law, absolute behavioral principle. And from the view of philosophical interpretation, we will understand the geopolitical imperatives as main laws and principles
serving the basis for fundamental and applied geopolitics. The system of geopolitical imperatives, the structural elements of which is a spatial expansion, geographic determinism, geopolitical dualism, geopolitical codes, geopolitical vectors, and geopolitical strategies, is subjected in its dimensions to the logic of historicism and pragmatism. The historical and axiological limitation of its constructive potential is meant. As far as the geopolitical imperatives of traditional (classith
th
cal) geopolitics (late 19 – the first half of the 20 centuries) was built on the basis of militant geopolitics through forceful methods, in a new (economic) geopolith
tics (geo-economics) (from the second half of the 20 century) the principles of
the behavior of international relations agents in geopolitical space were mostly
determined by the economic might of the state, the innovative civilizational geoth
st
politics (late 20 – early 21 century) in its constructive potential processes from
the consolidating project of future multidimensional geo-space, where political
culture together with socio-humanitarian values will enable to surmount the trans-
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formational chaos in a global socium and to define the strategic vectors of global
development. In addition, proceeding from the logic of fundamentalism in the initial essential concepts, geopolitical imperatives provide a key to intrinsic rethinking of regularities for distribution and re-distribution of spheres of influence
(centers of power) in multidimensional geo-space, for achieving the balance of interests in multi-vector system of geopolitical relations, for understanding how
«the geopolitical terrain» of global space is actually formed. It is unlikely that
there are hardly compelling arguments enabling to challenge these conclusions.
4. Geopolitical pragmatism and theoretical
and methodological constructions
of modern innovation civilizational geopolitics
Even a superficial acquaintance with the geopolitical imperatives at the
level of theoretical and methodological generalizations, argues that during the
th
second half of the 20 century there were landmark events which significantly
changed not only geopolitical pragmatism, but also the ideological foundations of
modern innovative civilizational geopolitics. One can refer in this connection to
the comment of Vladyslav Inozemtsev. «The scales of geopolitical changes,
which occurred in the world during the 20th century, are unique in history» [15,
th
p. 498]. Political world of the 20 century (from retrospective point of view) systematically moved towards reduction of economic and political heterogeneity and
asymmetry (decrease in chaotic and turbulent nature). While at the beginning of
the century there were eight big states in the world, at the end of the century the
crash of communist block put the lid on the matter of military geopolitical infighting, and in global space actually there remained only one superpower, i. e. the
USA. As a result, the socio-political structure acquired geo-economic and geopolitical integrity and perfection. Economic, political and social life throughout the
th
geospace became interdependent. «In the early 90-s of the 20 century, – summarizes V. Inozemtsev, – it seemed that the world stood on the threshold of the
era of prosperity, analogues of which the history still did not know». However, at
st
the beginning of the 21 century global geopolitically unipolar world happened to
be on the verge of another destruction and formation of a new world order, and
the globally-centered economy appeared to face reinstitusionalization (development of new, rational in the world scale principles of operation) and the formation
of a new pragmatic economic order. In the conditions of global turbulence the
humanity is concerned at least with two issues: how could the reasons of very
powerful «geopolitical tactonic» changes be explained? And how will change the
placement of forces on the «world chessboard» in the forthcoming millenium?
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The formation of a new world order is spoken about by everyone: from political leaders to experienced investors and analysts. Experts in the sphere of
geopolitical relations try to extrapolate how far the state leaders and ruling elites
will go in their aspirations to redistribute «spheres of influence» and «zones of interests» in the distributed world. Therefore, the scientists point out that at the
moment, just under conditions of extremely high dynamism in the development of
international relations and re-restructurization of the whole system of world order
there arises the intrinsic necessity of rethinking of traditional, and development of
new approaches to the world-wise understanding of geopolitics and geopolitical
imperatives within the system of international relations.
It is a paradox, but the global world has been already changed. The future
is mirrored in the processes taking place in the modern existentialistic dimension
(here and now). One thing is absolutely clear, that we are dealing with a unique
case of reorganization of the world order. And that uniqueness consists in the
th
fact that having practiced for the 20 century all the three concepts of the world
order (i. e. at first, multipolar world structure and military infighting, then ideological inconsistency and crash of bipolar system, and, at last nonadequacy of unipolar world to modern civilizational transformations) the humanity again happened
to get into the zone of turbulence.
What is the alternative? There is only one natural way out of this situation
(adequate to the turbulent logic of geo-space transformations) – that is, a diversification of geo-space, that in this or that way will lead to transformation of a unipolar world structure into a multipolar one. However, if you go back to the logic of
geopolitical transformations in the context of global development, their dynamics
is obvious to be fundamentally clarified. It is implied that in the course of its evolution, while transiting from one stage to another, geopolitical world order is
changing not only its external characteristics, but also its core essence, and accordingly the essential understanding of geopolitics also changes, likewise the
original (basic) "matrix of geopolitical imperatives" acquires specific features.
Methodological interpretation of the indicated and other components of this
problem will enable to make the next step, that is to provide fundamentally not
only new emphases and new approaches to the transformation of geopolitical relations, but also to reveal deeper multiaspect and specific asymmetries of global
development, taking into account the ideological basis, the original principles and
laws, theories, on which modern geopolitics is based. Now we will try to develop
these positions.
First of all, methodological construction «geopolitics in global space» is opposed to the systemic interdependency of «space in geopolitics». What is the importance of the named theoretical and methodological generalizations? In these
structures the logic of civilizational transformations and transition from classical and
new economic geopolitics to new civilizational geopolitics can be observed. A
separation is meant between two methodological constructions: on the one hand,
geopolitics as a science about the impact the territorial and spatial conditions (clas-
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sical geopolitics) and economic might of the state (new economic geopolitics) produce on the distribution and redistribution of states and international alliances’
spheres of influence in the global environment; and on the other hand – geopolitics
as a science about the regularities of all-civilizational development in the context of
multivariate (geopolitical, geo-economic, socio-cultural, etc.) space.
In this way the civilizational geo-politics attempts to do away with the geographic and economic determinism of classical geopolitics and geo-economics
through expanding the tools of basic factors determining the behaviour of geopolitical actors in global space (i.e. cultural values, customs and traditions, formal
and informal regulations (institutes), etc.
One more methodological limitation has to be met. In the classical and
new geopolitics the main accent is focused on the geopolitics of state which is
considered as a key subject of geopolitical relations. This methodological construction of geopolitics was actually founded back in 1648 through the Westphalian Peace that brought an end to the Thirty Year War in which the majority of
the European countries took part. The Peace of Westphalia contributed to building of statehood a consolidation of the European nations, the formation of national states in the traditional sense. It was, in fact, the forerunner of modern international law, having determined on contractual terms the European architecture as a system of international relations, thus legitimizing the legal personality
of the participating states. From those times on, both bilateral and coalition relations among the countries have been actually built under the known classical pattern. For almost three and a half century the mankind lived under the laws of the
Westphalian Peace passing through different stages from the euro-centrism with
its multivariate order to bipolar system of world order. In any case its characteristic feature was the availability of at least two centres of power.
In a new civilizational geopolitics (the building of which practically coincides in time with the period of globalization) the methodological construction
«geopolitics of state» is set against the systemic interdependence of «a state in
geopolitical space». According to the conclusion made by one of the founders of
word system-wise approach the known American sociologist Immanuel Wallerstein for the first time within the past five hundred years while losing its sovereignty (both internal, and external) «the country begins to develop in a declining
path» and is no longer «the main centre of decision making» [9, p. 262, 102].
That point of view is also accentuated by famous American politologist Zbigniew
Brzezinski (date of birth 1928). He believes that the globalization «promotes contradictory processes that bring about the erosion of traditional national sovereignties» and «loss of national control over main economic and social values» [8,
p. 7]. Not less authoritative in this respect is the position of one of the leading experts in the area of political psychology, the Russian scientist Mykola Kosolapov
(date of birth 1942). In his fundamental research «Globalization: territorial and
spatial aspect» M. Kosolapov convincingly argues that in the conditions of globalization «space as a social practice increasingly breaks away from the territory»,
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while «the globalization in practice means the beginning of the spatial reorganization of the world with its political and territorial division being preserved [19,
pp. 11–12]. Under those conditions «the potential of the old system has been exhausted», writes the Americal scientist sociologist Amitai Etzioni (date of birth
1929). The author is convinced that the old system (national states together with
intergovernmental institutions are meant) « is unable to cope with the increased
volume of transnational problems» [31, pp. 193–206].
At the beginning of the new millenium «…we are witnessing the crisis of
Westphalian order» and observe «the contradictory processes connected with
th
the systemic reformation of the constructed as far as in the 17 century under the
principles of the Westphalian Peaceful Treaty architecture of international relations, the foundations of which have always been the sovereignety of national
states» [10, p. 471]. What will the post-Westphalian architercture of international
relations look like? Probably, this question will stay open for a long time. However, it is worth noting that the probable frames of the post-Westphalian world
order are being designed today.
Within the new system-wise interdependence of «the state in geopolitical
space» primarily changes the status of internal sovereignty». The internal sovereignty does not fit any more with the frames of the old system and becomes
transnational» [30, p. 11], writes Yurii Shyshkov. Yet in late 1990-s the idea of
the transnational state was put forward by famous German sociologist and political philosopher, Professor of Munich University and London School of Economics Ulrich Beck (date of birth 1944). In his opinion, under conditions of globalization the internal policy of the state gradually transforms into transnational, and
national countries become transnational structures. He writes: «First, transnational countries do not become, national states, and respectfully, not territorial
states (in any case, in narrow sense)… And second, the model of transnational
state though negates a national state, but confirms the state (as a notion). The
conception of the state is getting free from territorial nets… Third, transnational
states become local states… which position themselves as provinces of the
world society, but at that they take a respective niche on global market and in a
multipole world policy [6, pp. 191–192]. In the conditions of globalization national
states and their sovereignty integrate into the web of transnational actors and are
subject to their powers, their orientation and identity» [6, p. 26]. According to
U. Beck, it is just those modifications that meet the logic of innovative social, in
particular geopolitical transformations, and the status of the state has been modifying in geopolitical space just in that way. The post-Westphalian world order is
likely to ever get a network-wise character, where «governments are becoming
the core points of global administration system which unites in addition to states,
international, intergovernmental and social organizations, transnational corporations, and global business elites (the pattern of Davos Forum) etc.» [30, p. 13].
And finally, there is one more principal methodological clarification. In geopolitics asymmetry of global development is caused by antipodes (i. e. peoples,
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ethnoses and civilizations with different socio-cultural traditions, interests, etc.);
theoretical concepts argument asymmetry as concepts – antitheses (for example,
sea – continent, East-West (traditional geopolitics), North-South, centre- periphery (new economic geopolitics); society can be closed and open, traditional and
civil, industrial and post-industrial, democratic and totalitarian; economy is divided into market and centralized, and culture is national and cosmopolitan, etc.)
Concepts- antitheses make fundamentals of geopolitical pragmatism, and are
viewed in geopolitics, on the one hand, as a driving force of global development,
and on the other – their inward asymmetry is a direct reason for upsetting balance, escalation of conflicts, and arising of global imbalances. The attempts to
meet the challenges of asymmetry and conflicts of interests are implemented in
geopolitical idealism on the level of philosophical and metaphysical ideas of the
world order establishment based on the human values and standards of international law. It should be taken into consideration that in modern conditions the
method of study of global development asymmetries is based both, on geopolitical pragmatism and material determinism, likewise on geopolitical idealism and
subjective-value principles providing for the decisive role of ideas, ideals and
consciously set objectives in the formation of world order. For confirmation of
similar methodological convergence of idealism and pragmatism in realization of
geopolitical relations it is worth mentioning that interstate relations and policy of
spatial expansion had come into being before the theory and concept of the
«world order» was developed. The development of events was ahead the generation of ideas. Thus, it is known, that the first statesman who put forward the
liberal program of world order, was American president Wilson (1856–1924). He
proposed to establish the world control through the collective activity of all the
countries. That ideology was made a basic for the building of the League of Nations after the World War I. But the Versailles world order and the new international institution did not exist for long. The World War II refuted the belief in
domination of «friendly» interstate relations against the expansionistic power politics. Further metamorphoses in the implementation of the expansionistic national
interests, in political and economic purposes of the states, and later – in purposes of other agents of international relations, occurred under the influence of
the public ideas evolution, which are in general beyond the exclusive state interests and interstate political relations. That conformism of thinking enriched the
academic geopolitics enhanced its theoretical and intellectual potential.
A perfect representative of idealism appeared to be a founder of French
school of classical geopolitics Vidal de la Blache. In his geopolitical concept a
man plays a leading role in activating space, and is not «the fragment of decoration in a historic theatre, but a protagonist in a performance» [23, p. 9].
Subjective idealistic metaphysical principles in some way underline the self
importance and sovereignty of a human personality, explaining the reasons for its
rational or irrational behaviour. Consideration of psychological, moral and ethical
issues in geopolitics extends the range of reasons in the behaviour of individuals,
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social groups, governmental bodies, promotes deeper realization of multidimensionality of global development asymmetries. The idealism appeared to have the
benefits, noted by the scientist of international issues from Harvard University
Stanley Hoffman. He said: «Economic life proceeds at the global level, but people continue to identify themselves with a particular nation ... World ... still is not
familiar with the collective consciousness and collective solidarity. What the individual states are seeking for, the world market itself can not provide the same»
[29]. This is the fundamental asymmetry and cardinal contradictions of modern
global development, implying that the economic processes are of global nature,
while political thinking traditionally is focused at national borders.
5. Geopolitical dimension
of the global development asymmetries
Typical philosophical dualism of idealism and pragmatism in contemporary
geopolitics can be traced in the process of geopolitical realities study in three
phases: they are (actually geopolitical realism), could be (geopolitical pragmatism),
should become (geopolitical idealism) by extrapolation of these basic methodological designs of major dimensions-descriptions after Stanley Hoffman (I mean methodological construction for creating and maintenance of international order in horizontal, vertical, functional and ideological dimensions) [see 23, pp. 152–161].
Horisontal dimension of global development asymmetries is represented by international relations between main participants, that is, the states who are the subjects of these relations which lie in a similar plane and are not structured. Those relationships are characterized both, by multiaspect forms and by multicriteria analysis
and evaluation. Therefore, to study the geopolitical realities in horyzontal dimension it
is important to determine the key parameters characterizing that relationship as
symmetrical or asymmetrical: the type of subjects, their number and character of in2
terelation between them , their quantitative and qualitative dimensions.
In horizontal dimension the most representative for theoretical conception
of the nature of international relations could become the application of the «interactionism» theory method, accentuating attention at bilateral interrelations between the countries (table 3).
2
In geopolitics international relations are defined by a number of subjects and the nature of
interrelations between them. In this context two theories are dominating in scientific literature,
namely «interactionism» (M. Kaplan, K. Deutsch, D. Synger, R. Rosecrance), representatives
of which view states as autonomous elements of international relations; «structuralism»
(B. Brown, J. Galtung), views international relations as a certain structure, the elements of
which are countries with different functional mission and respective place in this structure [24].
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Table 3
Horisontal dimensions of symmetry/asymmetry of geopolitical relations
in the area of bilateral interstate relations*
І type
Great Britain
Italy
=
=
Economic
parameters
(economic potential, GDP)
=
=
Nature
of relations
symmetrical
С
С
ІІ type
Russia
Ukraine
Тб
Тм
Пв
Пн
Nature
of relations
asymmetrical
А
А
ІІІ type
USA
Canada
=
=
Пв
Пн
Nature
of relations
Symmetrical/asymmetrical
С
А
IV type
Japan
China
Тм
Тб
=
=
Nature
of relations
Asymmetrical/symmetrical
А
С
Types
of bilateral
interstate
**
relations
Name of the country
Geographic
parameters
(Area of territory)
Notes:
*
Generalized and constructed by the author based on [24].
**
If the main parameters for determination of bilateral symmetry/asymmetry of interstate
relations include the area and economical potential of two countries, then there are four
types of relations, namely:
Type I – symmetrical relations (two countries are relatively comparable in territories and
economic potentials); type II-typical asymmetrical relations (one country prevails the other
both, in territory and in economic potential); type III –symmetrical-asymmetrical relations
(two countries are relatively comparable in territories, but are asymmetric in economic potentials); type IV -asymmetrical/symmetrical relations (demonstrates the inverse relations
against type III, that is, the countries are symmetric in their economic potentials, but are
not comparable in their areas)
Notations:
= – relative equitability in geographic and economic parameters; Тб – country with larger territory; Тм – country with smaller territory; Пв – country with higher economic potential; Пн –
country with lower economic potential; С – symmetric relations; А – asymmetric relations.
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Proceeding from that approach the nature between two subjects is defined
as bilateral symmetry/asymmetry under a set of certain quantitative parameters
(for example, economic and geographic ones: area, population that is building
the consuming demand, natural resources (geographic determinism); economic
parameters: GDP, GNP per capita, volume of export/import, investment and savings rate, level of innovation development, etc. (economic determinism), likewise
the qualitative criteria (political regime, constitutional system, type of economic
relations, nature of social relations in the society, etc.).
If the methodological concept of horizontal dimension is extrapolated to
multipolar world order, then the future geo-space is likely to diversify, having created the network structure.
The vertical dimension of asymmetries is represented by the relations between strong and weak partners, and methodologically is argued in theoretical
concepts of geopolitics through concepts-antitheses, like «Centre-Periphery»,
«West-East», «North-South».
The triumph of power based on the laws of spatial expansion, in this case
acts a guarantee of hierarchy-wise organization of international relations, and
rigid regulation of interrelations within the framework of the empires, providing a
typical example of domination in the international system of vertical dimension.
Actually, the entire system of geopolitical relations (which is proved by the political history of world nations for more than three and a half centuries) had been
developing on the basis of the spatial expansion and vertical hierarchy subordination. Thus, the states and empires, and interstate unions emerged. That process on geopolitical level signified the strengthening of the spatial factor in the history of human civilization development.
From methodological view, the country’s belonging to different levels of hierarchy is one of the essential signs that their relations are asymmetric. Another
essential peculiarity of asymmetry is «incomparability in location» (implying different approximation to a certain centre or plane).
If this peculiarity is extrapolated to international relations, it is possible to
define at least two systems of the benchmarking coordinates [24].
Historically, the first of them is peculiar for intersystem relations within empires and interstate associations. In that system the relations between its subjects are asymmetric, since one subject is the Centre itself (in the empire-states
that administrative-political unit or «pole»/»core» in geopolitcal interpretation; in
interstate polities it is the leading country), and another one is its Periphery. Accordingly, the asymmetric relations within the system of «Centre-Periphery» reflect the correlation between the whole and its part (fig. 1).
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Figure 1
Vertical dimension of asymmetries in geopolitical constructions
of «states-empires» and interstate polities
Periphery
(colonial countries)
Periphery
(second rate countries)
Centre
Centre
(leading country)
(metropolian country)
States-empires
Interstate polities
That character of relations provides for rigid centralization, system of seniority
and absolute subordination of the subject’s interests (as an integral part of the closed
system) to the interests of the Centre, that incarnates the integrity of that system; a
typical manifestation of asymmetric intersystem relations is domination and subordination. On the one hand, the subject’s resources have to be directed primarily for the implementation of the Center’s interests, as far as the Center is destined to accumulate
and represent the interests of both, the whole, and its parts. On the other hand, those
relations also provide for the reverse connection that does not exclude cooperation and
mutual assistance, since the empire countries have to strengthen their peripheries
considering them as the base areas of their further external expansion. That subordinacy originates a long-term, sometimes an age-long dependence of peripheral countries from the countries that personified the core of the empire.
The second coordinate system represents the vertical dimension of asymmetries in intersystem relations. In this given case the starting point according to which the
subjects determine the asymmetries of their positions in their relations, could be a certain level of development, achievements in this or that industry, mastering certain technologies, and the sphere of influence or domination. The position of the country in that
hierarchy is determined on the basis of geopolitical «laws of spatial expansion» and
certain set of criteria and parameters defining the geopolitical might of the country (i.e.
material factors, including military and economic potentials, availability of natural and
labor resources, achievements in the area of high technologies), likewise the spiritual
values (including the cultural and scientific development, level of ethnical homogeneity
and social stability, etc.) (Table 4).
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Table 4
Retrospective-conceptual quintessentializing
of the laws of spatial expansion in geopolitics*
Traditional (classical) geopolitics
th
th
(late 19 – the first half of the 20 century.)
Nicholas
Friedrich Ratzel
Spykman
(1844–1904)
(1893–1943)
Criteria of
geopolitical
Laws of geopolitical expansion**
might of the
state***
1. Territorial
1.Territorial expanse of the states
surface;
enlarges alongside with the devel2. Nature of
opment of their cultures;
borders;
2. Spatial enlargement of the state
is accompanied with other manifes- 3. Population;
4. Availability
tations of its development: i.e. in
(absence) of
the area of ideology, manufacturnatural reing, commercial activity;
sources ;
3. The state is expanding through
5. Economic
overtaking and absorbing political
and technounits of less importance;
logical devel4. A border is «an organ» situated
opment;
in the periphery of the state (in
6. Financial
Ratzel’s understanding of the orpower;
ganism);
7. Ethnic ho5. While carrying out its spatial exmogeneity;
pansion the state tries to cover its
8. Level of somost important for its development
cial integraregions, e. g. coastal areas, basins, valleys, and all other rich terri- tion;
9. Political
tories;
stability;
6. The initial expansion impulse
10. National
comes from outside, as far as the
spirit.
state is provoked for expansion by
the state (or territory) with much
lower level of civilization;
7. General trend to assimilation or
absorption of weaker nations promotes the dynamic enlargement of
territories that is fueled by itself.
New economic geopolitics and innovative civilization geopolitics
Geoeconomics
Zbigniew
Brzezinski
Criteria of geoeconomical
might of the
state
1. Indices of
Gross National
Product;
2. Index of
human development;
3. Population;
4. Purchasing
capacity;
5. Capacity of
domestic consuming market;
6. Level of innovation development;
7. Natural resources
Criteria of dominating position
in world
power****
1. Global opportunities for the
deployment of
armed forces;
2.World leadership for economic power;
3. Absolute
leadership in
major areas of
science and engineering;
4. Unprecedented attractiveness for cultural values.
* Generalized and constructed by the author.
** Ratzel F. «Laws of spatial growth of the countries» (1896).
*** Spykman N. America’s Strategy in World Politics: The United States and the Balance
of Power / Nicholas John Spykman. – New York, Harcourt, Brace and Company, 1942.
**** Brzezinski Z. Great chess board. – М., 1999.
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Methodological design of asymmetric intersystem relations is described by
the theory of «structuralism», which views international relations as a well structured hiyerarchical architecture (Fig. 2) whose elements are the superpower (the
highest level) great states (leading countries of the world, forming the second
level), medium countries (the third level) and small countries (accordingly, making the lowest level of the architecture). Within that pyramid-wise structure the
system of symmetric and asymmetric relations is formed (symmetric relations are
established between the countries of similar level, while asymmetric – among nations that are on different levels in the hierarchy of intersystem relations). The pyramidal structure of geopolitical relationships is more dynamic when the country’s
place in that hierarchy can change.
The vertical dimension of the global development asymmetries was theoretically grounded in Immanuel Wallerstein’s the world-systems theory [9; 38] and
formulated by the Club of Rome’s «geopolitical concept of «North-South». Thus,
I. Wallerstein offered the world – systems theory based on Trinitarian hierarchy
structure: «core-semiperiphery-periphery».
Figure 2
Pyramidal structure of geopolitical relations based
on methodological construction of vertical dimension
Levels
GEOECONOMIC
LEADER
Criteria
(after economic development)
І – The top level of economic
development
І – Superpowers
ІІ – Leading world
countries
ІІІ – Dynamically
developing countries
ІV – Peryphery
GREAT
POWERS
(«Great Seven
of the North»)
NEW INDUSTRIAL
COUNTRIES
(1–4 generations)
COUNTRIES-OUTSIDERS
ІІ – High level of economic
development
ІІІ – Medium level of
economic development
ІV – Low level
of economic
development
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According to Wallerstein the most dynamic element in this structure is
«semiperiphery». During the restructuring of the global economy and the respective transformation of a political map the changes occur at the expense of
«semiperiphery». Some countries culminate to the top level (core), while others
degrade to the state of the periphery.
The geopolitical conception of «North-South» is constructed on asymmetry
and opposition of macro-regions of the rich North (created by the nations of «gold
billion» including the USA, Canada, Western Europe and other highly developed
countries, including Japan, Israel, Australia, and New Zealand) and the poor
South (nations of «hungry billion», situated mostly in tropics and subtropics, i.e.
Central Africa and Indian Ocean Arc). While in the North-Atlantic part of
macroregion the multi-purpose infrustructure has been developed for highly
technological production including information and communication technologies,
the «South» geoeconomic macroregion is described by the processes of demordenization and marginalization of social and economic relations.
Methodology of functional dimension of the global development asymmetries is based on the geopolitical imperatives enabling to position the subjects of
international relations in geospace, to determine the behaviour of the participating countries, and their economic exchanges, moral values, and political ambitions of their leaders. The functional interrelation and interconditionality is meant
between geographical determinism in a wide sense, geopolitical code(as a multivector system of political relations of the country and the ROW, that historically
is developed on the basis of the balance of national interests, and ensures to the
country a certain status on global, regional and local levels), geopolitical vectors
(that is, geostrategic lines of foreign policy of the state on global, regional and local levels, based on its geopolitical code), geopolitical strategies, that are the
ways of implementing the pragmatic interests of the state in global space.
From the logical view of global transformations the most contradicting position of a respective methodology is the absolutization of geographic determination principle, that in traditional geopolitical sense grounds dependence of the
development of the society and foreign policy of the state upon its natural and
geographic conditions (implying the so called «geographic fatalism»).
Actually, on early stages of social development up to the epoch of industrial revolution the effect produced by natural environment on a human being, society, and state was not critical though essential. The industrial revolution originated a new stage in the relationship between the state foreign policy and the
geographic frames of that policy. Consequently, the simplified vision of «geographic fatalism» transformed into «economic determinism». The latter grounded
the achievements of foreign political aims, and the world and regional «might» of
economic dominants (i. e. international competitiveness of commodities, industries, and national economy as a whole; level of innovation and technological development; adequacy of national capital and the level of access to external
sources of funding, etc.). Unlike geographic, the economic determinism accentu-
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ates the communication vectors of capital movement, production, goods and services. Nevertheless, the geographic factors play a significant role (for example,
availability of water and land routes, natural resources, fuel and energy resources, etc.) And despite the fact that during the new (economic) geopolitics
(since the second half of the twentieth century) the «geographic determinism» de
jure became a kind of anachronism, and de facto, it remained the dominant for
the formation of geo-economic code and geo-economic rent (major source of
world income). For example, the impact «geographical determinism» has on the
policy of redistribution of resources and world income is eloquent for the quotation of Lopez Portillo’s the first President appeal to Mexican people in 1976,
when he emphasized the importance of oil for the enrichment of Mexico: «In
modern times the countries could be divided into two groups – those who have
oil, and those who have none» [Quat.: 1, p. 78].
In the new civilizational geopolitics there occurs rethinking of conceptual
basics of «geographic determinism». Predatory exploitation of natural environment has brought about the increase of anthropogenic loadings on natural conditions for human life, which resulted emergence and extraordinary aggravation of
global problems threatening the very existence of civilization.
«Boomerang returns. Nature takes revenge for itself that it does not provide a man any more sufficiently favorable conditions for existence and thereby
forcing the state and politicians to take into account natural factors» [23, p. 16].
Like in the past, the influence of geographic environment is admitted on
the society existence, culture and history of peoples. However, at that the attempts are made to radically correct the essence of the notions «nature» and
«man» in the context of their correlation. That approach conduces the integration
into the single conceptual unit of various contradictory constituents of «the phenomenon of a man», natural and scientific, and socio-humanitarian approaches,
components of natural and social areas of existence. It is obvious that the new
concepts of geopolitical idealism are far from simplified visions about so called
«geopolitical fatalism», about absolute determination of human activity by the
factors of natural environment.
At the same time, modern geopolitical pragmatism based on the imperatives of «spatial expansion» and «geographic determinism» is more often accompanied with the collision of states’ interests and aggravation of competitive
fight on the world market for the control over limited (and in addition, asymmetrically placed) natural resources and information space through the utilization of
innovative technologies. As a result of the technical progress in the development
of world communications (in particular, sea and air transport), expansion of
spheres of influence of transnational companies, and intensification of economic
global monopolization, there occurs the surmounting of geographic seclusion of
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certain countries. Their economic interests could exceed the frames of state bor3
ders expanding «zones of living interests» and thus provoking geopolitical wars .
Stenley Hoffmann connects the accentuated attention at the ideological
dimension (in his vision of main dimensions describing international order) with
the end of the Second World War and creation of two opposite socio-political systems which de-facto escalated the world polarization through ideological discrepancies. However, de-jure, the ideological dimension of global development
asymmetries is based on the main law of geopolitics, namely, on fundamental
dualism that reveals in geographic structure of the planet, and in historic typology
of civilizations. Historically and forever that dualism is of alternative nature of its
two civilization poles (continental and maritime powers), and respectively, two
classical ideologic geopolitical models, namely:
•
«tellurocratia» that is related to the fixed space and its stable quality
orientations and characteristics. On the civilizational level it implies
conservatism, established formal and informal institutes subjecting
significant formations (communities) of people (families, tribes, peoples, states, empires). The tellurocratia is manifested in rigid ethic
standards and firm social traditions. Individualism and entrepreneurship do not pertain to landmen (especially settled people). They are
characterized by collectivism and hierarchy;
•
«thalassocratia» that is based on opposite principles. That type of civilization is dynamic and tending to development. Among its priorities
are the following: activation of international trade and spirit of individual
entrepreneurship. The individual as the most dinamic element of the
community is considered to be of the highest value, while ethic and legal standards at that are becoming somehow obscure, relative and
dynamic. That type of civilization is rapidly developing and actively
evolutioning, it easily changes its external cultural features, at that the
unchanged are only insight identity of the general arrangement.
The primordial ideological dimension in geopolitical space playd the role of
an «engine» for historic and civilizatational development. At first the confrontation
between tellurocratia and thalassocratia reflected the differentiation of the world
into two conflicting powers of continental and naval states. That dichotomy manifested in the conflict of interests, fight of contradictory opinions, and sometimes
fight of deep political misunderstanding, so far is applied in most of geopolitical
(geo-economical) models. As far as the continental civilization with its conservative (and in some cases autoritarian) basis has become the ideological ground for
3
For example, the creation of the net of American military bases in the area of the Persian
Gulf, that is rich in oil; aggravation of conflicts in the majority of muslim countries, rich in
fuel and power resources, which are connected with demand to review the existing system
of distribution of natural rent; 2008 power crisis in Europe and the issues of energetic
security becoming of the first rate urgency.
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creation of «closed society», the logic of maritime civilization formulated main
principles of the «open society», putting forward the advanced liberal and democratic values of legal civic society.
However, in the new (economic) geopolitics the «phenomenon of globalization disturbed the strategic consensus between the economic universum and
liberty of human individual» [5. p. 14]. Ideologic basis of geopolitical hegemony is
built now on the principle of absolute domination in economic and financial areas
(the competitive advantages are meant in manufacturing, trade and financial activities enabling to redistribute geo-economic rent for one’s own interests). Lately
it acquires very dangerous forms, since domination of economy over socium is
intensifying, and that causes «significant degradation of the society, an individual
and money… at the moment what serves the human life is not the economy,
while the human life becomes the means for expanding and priming of economic
sphere at the account of ruining of sacral and cultural values. Economism (in
ideological dimension – noted by N. K.) became the basic means for distortion of
socium and the very economy (say nothing of culture)» [5, pp. 14–15].
In modern new civilizational geopolitics the ideological dimension manifests further aggravation of global development asymmetries, disturbance of balance in geospace, and permanent sharpening of global imbalances. Metaphysically, it is explained by two historically classical patterns of instable international
order: «state of war» and «patched-up peace».
According to the first model the general standards of international relations
are shaky, temporary and proportional to that force which supports them. The
supporters of that model, famous philosophers of the past (Italian Nikkolo Makiaveli (1469–1527), English Thomas Gobbs (1588–1679), French Jean Jackues
Rousseau (1712–1778), German Emmanuel Kant (1724–1804) considered, that
in «international relations» there «does not exist general mind which would degrade the ambitious of any participant, but there is specifically institutional rationality, implying search for the best means for achieving specific aims, calculation
of forces leading to hegemony instead to conflicts» [23, p. 158].
With respect to the second model, the geopoliticians regard, that it is the
response for arising of the states-nations. This model views the interstate relations as the environment where there are forces able to guarantee the minimum
order. Those forces are formed of the countries which unite on the basis of common interests, and that brings about the creation of general legal rules. The English philosopher John Locke (1632–1704) versus T. Gobs considered that natural
state of the society is not «the war of all against all» but personal liberty and
freedom under absence of a single union and common sovereign. Naturally it
could create the opportunities for abusive practice, and therefore the state is
obliged to protect the principles of natural law [23, p. 158].
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Proceeding from the above mentioned the modern civilizational geopolitics
requires new morally axiological principles which can not be developed by the
globalized economy of liberal society itself.
Conclusion
th
The global development in the 20 century was accompanied with the cyclical change of international order and transition from multipolar system of geopolitical relations to bipolar, and subsequently to unipolar world. Thus, the multith
polar geopolitical structure of the world peculiar to the 20 century in late 40-s
transformed into the rigid bipolar one, that existed till the end of the 80-s. The activation of the globalization process and collapse of bipolar system of international relations synchronized to some extent enabling the monocentrism supporters to predict the beginning of the formation of the unipolar world (the majority of
them prefered the USA in that process, who took the dominating positions in
th
economic and political spheres in late 80-s of the 20 century). However, as a
th
st
result of geopolitical break at the turn of the 20 –21 centuries the stratification
of the states aggravated in political and economic spheres; instead of the forest
cast stability on the threshold of the 21 century the wolrd received a confusion in
the political life and once again proceedes towards the changes of geopolitical
leaders. According to the logic of cyclical development the modern global world
comes through the stage of creation of multipolar system, the frames of which
are being still designed. The existing system of international relations that had
been created for some centuries as a modified variant of Wesfalian system is
adapted to perceive geospace in the categories of controversies, asymmetry and
biopolarity. From the view of that methodological concept most of the experts
while modeling the geopolitical pattern of the future are tending to the idea that
the multipolar world will be less unpredictable and balanced than it was in the
years of controversies of the polar political systems, since more actors moved to
the front of the political scene, and the conflict lines became less clear while their
essence became less transluscent.
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The article was received on November 21, 2011.
JOUR NAL
o f
Vol. 10 (№ 4). December 2011
Te r n o p i l
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383
U n i ve r si t y
REGIONAL ECONOMIC POLICY
OF AZERBAIJAN AND NAKHCHIVAN
Abstract
The important issues of economic policy connected with Nakhchivan are
described in this article. It has been noted that economic development of Azerbaijan regions is the priority of economic policy of the country’s authority.
Nakhchivan economic region takes a special place among the regions of the
country.
Key words:
Nakhchivan Economic Region, economic policy, economy of regions,
transport communication, economic course.
JEL: P40.
© Ikram Ismail Ohly Dzhabrailov, 2011.
Dzhabrailov Ikram Ismail Ohly, Nakhchivan State University, Azerbaijan.
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O h l y
D z h a b r a i l o v
Regional Economic Policy
of Azerbaijan and Nakhchivan
1. Economic policy of Azerbaijan
government towards regions
The State program of social and economic development of regions,
adopted in 2004, played an important role in Azerbaijan’s development. During
its realization, a great creative work was conducted; the high level of macroeconomic indicators was reached. For the period of five years, the actual volume of
GDP increased 2,6 times as much and amounted to 47,5 billion dollars, nominal
level of GDP per capita increased 5 times as much and amounted to 5550 dollars.
Summarizing the results of 2008, the share of non-state sector in GDP
amounted to 84,5 %, in industry and agriculture – 25,2 %. Population income in
2008 in comparison with 2003 increased 4 times as much, the level of poverty
reduced to 13,2 %. For that period, the average monthly salary of employees increased 3,5 times as much and reached the amount of 335 dollars. During last
5 years, the volume of investments, invested into the fixed capital by means of all
sources of financing amounted to 41,88 billion dollars, 53,2 % of them are domestic investments. For that period, the overall volume of state investments,
channeled on the regional development, amounted to 8,5 billion dollars. The volume of investments into the non-oil sector for the period of 5 years, increased
6,2 times as much and its specific weight in the structure of total investments increased from 26,8 % in 2003 to 69% in 2008. In 2004–2008, the increase of the
volume of state investments caused the increase of the construction volumes in
the regions of the country. The infrastructure of social objects, public utilities,
transport communications, objects of communication, water supply and melioration. For that period, 9 electric power stations were built and put into operation in
the country. Three of them were modular plants; there electric power stations
were built in Nakhchivan Autonomous Republic, thermal electric power station in
Sumgayit two electric power stations in Baku. After an internal for the period of
13 yeфrs, the gas supply to Nakhchivan Autonomous Republic was resumed, for
the first tome the gas supply was provided for 6 regions. Nowadays, the population of Azerbaijan is provided by gas supply for 85 %.
In 2004–2008, the main lines were repaired, the road section 600 km long
of republican status, and road section 500 km long of local status was mended,
34 bridges were mended and 69 bridges were constructed. Throughout the duration of 5 years, 4 modern airports were constructed and put into operation.
Within the framework of the State program of social and economic development
of regions, 33 houses for physically handicapped people, and families of people,
who has dead during the Nagorno-Karabakh War were built, 7 centers for physically handicapped people and 7 new modern diagnostic and treatment centers
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were opened. For the period of 5 years, 636 new schools were built in the regions, 192 schools were completely repaired, and 243 new class-rooms were put
into commission.
In the regions of the country 18 modern Olympic Sports Complexes were
put into commission. 88 % of enterprises, founded during the last 5 years, are
private. To support the development of entrepreneurship activity by means of the
National Fund of Azerbaijan Republic on entrepreneurship’s assistance,
699 business entities were granted preferential credits amounting to 404,25 million dollars. By means of these costs, 68, 2 thousands of working places were
created.
Generally, as a consequence of target-oriented measures in 2004–2008,
more than 766 thousands of new working places were opened in the country,
547,5 thousand of them are permanent. Mote than 27, 5 thousands of new enterprises were established. Inasmuch as the country’s development was very
high, in 2004–2008 the program was amended. In these years, the increase of
GDP was at the level of 20 %. In such a way the additional incomes to the
budget influenced on the amendments to the Program. In general, we may say
that the program 2004–2008 was overfulfilled.
In 2009, in accordance with the President’s Order the «State Program of
social and economic development of Azerbaijan Republic’s regions in 2009–
2013» was approved. In this document, the further increase of the reached
achievements was predicted. In the new State Program together with the development of the country’s regions, the measures, connected with the social and
economic development of Baku and its surrounding regions was foreseen.
Implementation of this new Program as saying Ilham Aliyev, will provide
opportunities for reaching of the world level of development. All outstanding issues concerning development of the economic branches in the regions of the
country, namely specific problems of districts, villages, towns towards the improvement of the living standards were considered in the Program.
In accordance with the goal-oriented policy of the country concerning dynamic development of economy, further increase of the social standard of living,
subject to the efficient usage of the available potential, provision of the development of all regions, State Program includes new tasks, which comprehend 1066
measures. In particular, It is stipulated the establishment of new enterprises and
extension of productive activity of already existed ones, acceleration of the new
IT-technologies introduction, improvement of social infrastructure, construction
and reconstruction of the education, health care and science, cultural and sport
facilities in accordance with up-to-date standards, construction of houses for
physically handicapped people, and families of people, who has dead during the
Nagorno-Karabakh War.
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I k r a m
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O h l y
In 2009, towards social economic development, by means of all sources of
financing, the costs amounting to 9,25 billion dollars were channeled on capital
investments – 3,63 billions of dollars of them – on regional development. In a
year, after the State Program adoption, 9 plants were put into operation. The order of Azerbaijan National Fund costs’ application, concerning assistance for entrepreneurship was simplified, the maximum tax preferential credit were reduced
to 6 %, the terms of credit obtaining was reduced to 25 days, the maximum
amount of credits was increased up to 6,25 million dollars. In 2009, at the Fund’s
expense, the preferential credits were granted to 2101 enterprise for the amount
of 162,5 million dollars.
Within the framework of the State Program 2009, the important measures
in the sphere of construction, reconstruction of facilities intended for social
needs, health care and education were conducted. In all regions of the country,
the measures towards ecological balance renewal, environmental protection, and
meeting the demands of people on clean drinking water were conducted. The
year 2010 рік was announced as the «Year of ecology». Upon an initiative of the
President of Azerbaijan Republic in Baku and surrounding populated places
three millions of trees were planted, the forest zones on both sides of the roads
were formed, likewise parks in villages and towns. For the year then ended,
117 houses for physically handicapped people, and families of people, who has
dead during the Nagorno-Karabakh War were reconstructed and put into operation. 63 health care and 67 educational facilities were constructed or repaired.
Upon an initiative of Heidar Aliiev, 6 new schools were built, 7 Olympic
sport complexes were put into operation.
In 2009, 74 thousand new working places were opened, 54,5 thousand of
them are permanent.
For the period of last 6–7 years in Azerbaijan Republic, more than 2 thousand schools, 400 medical centers, 29 Olympic sport centers were built. It is important to create social infrastructure in the regions, in particular, social infrastructure in the sphere of health care. A special attention in our country should be
paid to the private sector. In 2004–2010 upon the initiative of National Fund, preferential credits in the amount of 875 million dollars were granted. 80 % of credits
are granted to the regions, which demonstrate the national priorities in the structure of the public policy. The private sector is very responsible here. Of course,
while credits granting, the payment ability of credit receivers is analyzed, the
possibilities of private structures are studied, the companies with perfect credit
history are chosen.
The Head of the state, who personally controls the realization of the Second Program, carried out 27 trips to the regions, took part in the opening ceremonies and laying of the foundation of more than 170 industrial and transport enterprises, educational institutions, institutions of health care, culture, sport and
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tourism. After these trips, the Resolution on additional actions towards acceleration of socio-economic development of some cities and regions was signed.
Since 2004, at the expense of all state financial sources, 15,5 million dollars of investments were channeled on the regional development. Hundreds of
important projects were realized.
In 2010 more than 635 km. of roadways were constructed and put in order
in accordance with international standards. International sea port and shipbuilding yard will provide the further development of the transitive potential of the
country. Regions in full scale are ensured by the continuing national electricity
supply. Only in 2010, hydro-electric power stations, new electric power substations, HV lines were put into operation, the foundation of 4 small hydro-electric
power stations was laid, 5 electric power stations were constructed. As a result
of the work, done, Nakhchivan Autonomous Republic, is exporting electric power
for some years. Over the period of one year, within the framework of the State
Program, 3770 km. of new gas pipeline was laid, 500 km. of gas lines were renewed and repaired, and 49 populated places were supplied by gas. Construction of water purification sets in 156 populated places of 18 regions along the rivers Kura and Araz within the framework of enhancement of provision of citizens
with high-quality water imroves the water supply for more than 300 thousand
people. The water pipeline Oguz–Habala–Baku was put into operation.
In 2010 more than 160 enterprises of industry, agriculture, trade and service were put into operation, including canning plant and tea factory, automobile
plant, some plant of constructional materials, technological park, saltworks, dairy
units, stock-raising complexes, and other enterprises. 200 enterprises are still
constructing, including 12 enterprises of agro product processing, plants on constructing materials production, 112 of these enterprises have obtained preferential credits from National Fund of entrepreneurship assistance. In whole, over the
year, to finance 1430 investment projects, preferential credits amounting to 143,
75 million dollars were allocated. By means of preferential credits the enterprises
that play a key role in the agricultural sector development were financed. To create an infrastructure of agricultural products preservation by means of preferential credits of the Fund, the construction of 25 modern refrigerator complexes with
total capacity of 85 thousand tons and 17 grain storages with total capacity of
270 thousand tons. Besides it, 2 grain elevators were put into operation. In accordance with the adopted set of measures on state support, other branches of
agriculture continue to develop, the needs of the country concerning main food
products were provided at the local production’s expense. At the time when the
problem concerning subsistence support exists in the world, the named measures provide the improvement of the food safety; play an important role in export
diversification, increase of non-oil production export. About 100 business forums
and conferences were organized in order to extend the possibilities of Azerbaijan
products to entry into new markets.
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One of the main directions of social state policy – special attention to the
people, which need social protection, invalids, veterans, needy people and refugees and forced migrants. For the period of 2010 in Baku three houses for
234 flats, were built, in other regions – 12 houses for 272 flats were built. For
refugees and forced migrants 2 houses and school were put into service, 2 housing developments with necessary infrastructure were built.
In 2010, 45 institutions of health care were opened, 25 institutions of health
care – in regions, 70 schools were constructed and reconstructed, 43 schools – in
the regions, 4 Olympic sport complexes and 4 sport centers were put into service,
9 sport complexes are in the process of construction. Generally, within the framework of the State Program, in 2010, 4300 new enterprises were established, 73
thousands of new working places were opened, 52 700 of them are permanent. As
the result of the performed work, in particular in the sector of socio-economic development of the regions – the level of poverty was reduced to 9 %.
2. Economic policy towards Nakhchivan –
realities and perspectives
Nakhchivan Economic Region holds a specific place among the regions.
This region differs from the others by its some peculiarities. Firstly, Nakhchivan
Autonomous Republic consists of enclave, inasmuch as its territory does not
have direct borders with the other part of Azerbaijan. It has no possibility to support intensive economic relations with the other regions of the country. At the
same time, Nakhchivan closely cooperate with Iran and Turkey.
These circumstances influence on the structure of the economy of
Nakhchivan Autonomous Republic. Nakhchivan has to form the strong economy
by means of its endogenous capacity.
Realities of Nakhchivan Autonomous Republic are an important factor of
formation of Azerbaijan economic policy. Historically, the industry of Nakhchivan
Autonomous Republic holds one of the leading places in Azerbaijan economy. A
special attention was paid to light industry, food industry, and others.
In 1970–80-s the majority of Azerbaijan products were channeled to foreign countries. Mineral salt, molybdenum, zink, plumbrum, some mineral waters,
silk, construction materials, marble, vines, fruit, canned jam, produced by Azerbaijan, was made in Nakhchivan Autonomous Republic. Within its territory, there
are a great number of mineral sources, which are known all over the world.
The development of industry of Nakhchivan Autonomous Republic became
to increase in 1969, when Heidar Aliiev was elected as the President of Azerbaijan. In 1970 – 85 900 million of rubles of the capital stock were invested to de-
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velop all branches of economy of Nakhchivan Autonomous Republic. In this period, the knitting factory for linen production, new mineral water plant, containerglass plant, mill, plant of concrete components, Shahtahtyn stone quarry, 16 big
industrial enterprises. Together with Iran Jumhuri Islami the electric power station
and reservoir storage were built on the river Araz [5].
Armenian invasion on the territory of Azerbaijan Nagorno-Karabakh and
the war which began in the first half of 1990-s, has put the economy and industry
of Nakhchivan Autonomous Republic in a predicament.
Today’s President І.Аliiev highly evaluates the industrial and economic
possibilities of Nakhchivan Autonomous Republic [2]. Industrial possibilities of the
country help to provide working places for the part of the country [1]. Geopolitical
position of Nakhchivan enables to name some propositions, which should be
considered by the corresponding authorities. Taking into consideration the geographical position of Nakhchivan, it is expedient to establish industrial enterprises, which work for government order.
The second issue is connected with agriculture. Favorable climate conditions of Nakhchivan Autonomous Republic enable the agricultural development.
Residence of the majority of population in the rural area and involvement in the agricultural sector is a background for priority-oriented development of this industry.
Mainly, the rural population grows crops, vegetables, potatoes, fruit orchards breeds animals. The land reform in Nakhchivan Autonomous Republic
was conducted in order to develop agriculture. As a result of implemented reforms 10,5 % of total land area was passed into the private ownership, 56,3 % –
into municipal ownership and 33,2 % – stayed in state ownership. The total land
area amounts to 536,3 thousand hectares, 176,9 thousand hectares, in other
words 33 % of it is good for agriculture. 14,5 thousand hectares of lands, good
for agriculture in other words 31,9% are irrigative. From this point of view, the
right organization of ameliorative-irrigative works plays an important role in the
agricultural sector development.
Such rivers as Araz, Akhurian, Nakhchivanchay, Gilanchay, Alindjachay
pass the territory of Autonomous Republic. To irrigate lands 82 watering plants
and 589 are used in Autonomous Republic, 589 subartesian wells and
277 kahrez. As a result of conducted actions, agricultural the production output
increases with the years. For maximal use of the agricultural products, it is expedient to build a great number of canning plants.
Together with the main productive sectors of economy, it is important to
improve infrastructure. Transport sector should play the leading role here. Geopolitical conditions of the Republic cause the feasibility of usage of automobile,
air and railway transport.
In Republic the main mode of transport is automobiles. The cities, towns
and villages are conjoined with each other by means of public transport bus.
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To strengthen relations with neighboring countries, automobile transport
plays an important role in goods and passengers’ carrying. On the ground of
agreement, signed between the companies of Turkish Republic «Igdirli Turizm»
and «Jan Igdir», the carrying of passengers by buses is conducted into such cities of Turkey: Stumble, Ankara, Izmir, Antalya and others. Agreements with the
transport companies of Iran Jumhuri Islami on carrying passengers are conducted. To improve the relationships with the main territory of Azerbaijan since
2007, the regular bus runs «Nakhchivan–Baku–Nakhchivan» go through the territory of Iran. The development of the automobile transport depends on the automobile roads. Therefore, projects on improvement of road network should be of
high-priority. Transport policy will promote the formation of additional industrial
complex [3]. At the same time, the developed transport links mean the profit increase in the tourism sector, which has a special potential in Nakhchivan [5].
Bibliography
1. Мамедов, Мамед. Расширение промышленного потенциала Нахчывана //
Газета «Азербайджан». – 2008. – 24 февраля. – № 43.
2. Нахчыван развивается с каждым днем, красивеет, улучшается: визит
президента Азербайджана Ильхама Алиева в Нахчыванскую Автономную Республику (3 августа 2009 г.) // Газета «Халг». – 2009. – 4 августа.
– № 169. – С. 1.
3. Новый асфальто-бетонный завод был открыт в Нахчыванской АР // Газета «Экономика». – 2007. – 1–7 ноября. – № 44. – С. 2.
4. Халилзаде Ф. Нахчыван улучшающийся с каждым днем // Газета «Азербайджан». – 2007. – 7 июля. – № 147. – С. 5.
5. http://spb-nakhchivan.ru/nakhchivan-economy
6. http://www.mediaforum.az/az/2008/07/18/AZƏR-ƏMİRASLANOVAZƏRBAYCANIN-DÖVLƏT-SİYASƏTİ-110052668c04.html
7. http://w1.economy.gov.az/index.php?option=com_content&view=article&id=3
39&Itemid=77
8. http://www.nakhchivan.az/portal-1/news/fevral-2011/news4.html
JOUR NAL
391
Vol. 10 (№ 4). December 2011
o f
Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
Halyna MARKOVSKA
REGULATORY CONSIDERATIONS
OF MIGRATION FLOWS WITHIN
THE FRAMEWORK OF EU-15
AND COMMON MIGRATION POLICY
OF EUROPEAN UNION
Abstract
The regulatory considerations of migration flows within the framework of
EU-15 are considered. The institutional levels of migration management in the
EU member states are analyzed and the division of national migration policy of
EU member states within the framework of internal migration flows of EU member states and towards the migrants from the Third World countries is offered.
Key words:
Common migration policy of EU, migration legislation, labor migration, EU-15.
JEL: J61.
© Halyna Markovska, 2011.
Markovska Halyna, Ivan Franko National University of L’viv, Ukraine.
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Regulatory Considerations of Migration Flows Within the Framework
of EU-15 and Common Migration Policy of European Union
Problem definition. Migration provides possibilities for satisfaction of
market’s needs concerning labor power, inasmuch as the migrants are specified
by high mobility, unpretentiousness, and acquiescence in relation to the national
labor power. European Union is one of the basic centers of gravity for migrants.
Permanent changes in the political and economic situations of EU memberstates show the necessity of active development of complex European migration
policy.
Analysis of the latest researches and publications. Lots of scientists consider issues in the area of migration, in particular issues concerning state management of migrations. Among them such West scholars as G. Becker, R. Brubaker,
V. Іsaiiv, G. Кrieger, W. Christaller, D. Massey, О. Starck [10], M. Тоdaro [12] and
others. Ukrainian scientists have made a great contribution into the development of
scientific researches concerning migration processes, studying the reasons and
socio-economic consequences of international human migration. Among them:
А. Haidutskyi [1], І. Hnybidenko [2], Т. Drahunova [3], Е. Libanova, Yu. Маkohon,
О. Malynovska, О. Оvchynnikova [5], Т. Petrova, І. Prybytkova, S. Pyrozhkov,
О.Pozniak [8], А. Poruchnyk, Yu. Rymarenko, М. Romaniuk, А. Rumiantsev, А. Filipenko, S. Chekhovych, М. Shulha, О. Khomra [9] etc.
Tasks and objectives. The objective of the scientific paper is to analyze
regulation mechanisms of migration processes in EU-15 within the framework of
EU common migration policy, and define the nature of national migration policies
of the given countries.
Main part. Modern events in the world (war in Libya, Tunisia, Egypt, etc) force
the governments of EU member states to tighten control over the migration flows. Inasmuch as the there is a need in a general strategy of migration flows management,
the European Commission appeals to the EU member states to combine their efforts
in order to provide the further development and realization of common migration policy, based on the distinctly defined principles and backgrounds.Each EU member
state has a right to determine its own migration policy. Nevertheless, there are such
legislative acts which define the principals of the migration policy of the country and
determine certain obligations before the Commonwealth.
Common migration policy of EU provides the flexible system of actions,
which should guarantee the social and economic development of EU market,
promote the intensification of partnership among countries – participants of migration process and realize the jointly set goals. Nowadays, the given policy
should be implemented according to such main directions:
1) Encouragement of labor migration;
2) Policy of migrants’ integration in the country of destination;
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3) Combating with irregular migration, and trafficking in persons;
4) Common legal norms of visa policy realization and asylum policy;
5) Cooperation with the Third World countries in the sphere of control
over the volumes of migration;
6) Common control over volumes of migration by all EU member states.
Migration policy of the countries should stipulate a range of measures.
They are: demographic restrictions, regulation of market needs, social expectations, health trade obligations, safety provision, general development of the country, increase of the education level etc. The future choice of mechanisms of active migration policy should coincide with the abilities, education and qualification
of potential migrants. Besides it, the governments of the countries should provide
all necessary conditions for migrants. Even if the forecasts stipulate the qualitative and quantitative deficit of labor power, the governments will have to obtain
stronger evidences in order to persuade the society in the necessity of involvement of foreign labor force. It means that at the time when the forecasts can
serve as a basis for policy planning in the sphere of education, labor market, social protection, and social reforms, it is probable that migration policy will remain
at the stage of short-term measures. In this context, the development of middleterm and long-term policy in the sphere of labor migration will provide possibilities
to solve demographic and economic problems of Europe.
EU member states have to develop the mechanism of labor power encouragement, which stipulates such measures:
1) analysis of current, middle-term and long-term labor market needs of
EU member states;
2) improvement of the migration climate in the countries, which belong to
the less attractive clusters for the migrants, by means of the evaluation of present
and future potential of the countries;
3) creation and development of European-wide system of national «profiles» of, which will contain information about the peculiarities of labor markets,
system of provision of employment, characteristic features of migration processes and general information about the labor market;
4) improvement of the labor law and system of provision of employment;
5) development of programs of acquiring of new knowledge and skills,
qualification improvement, likewise programs of training of migrants in the countries of destination;
6) encouragement of development in the countries of independent entrepreneurship among migrants by means of legislative support, alleviation of selfemployment conditions and assignment of benefits.
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Extension of Schengen zone and introduction of visas for the neighbors is
the biggest obstacle for human capital international exchange. Very often, the introduction of visa regime is interpreted not only as a means of EU external
boundaries’ security enforcement, but also as a discrimination of the citizens
from the Third World countries. To realize the principles of legal equality and
partnership, it is necessary to alleviate the painful consequences of visa regime
with the countries of Schengen zone, which stipulate the provision of easier access to the visas for usual citizens, which adhere to all legal standards and fulfill
their obligations.
Migration legislation of EU member states is essentially different, especially if we analyze the migration policy of EU-15. Countries which first enter into
EU faced the problems concerning non-regulated migration flows, trafficking in
persons. Thus, within the framework of policy of combating with irregular migration, the government of Portugal carries out the massive legalization of migrants
in order to solve partially the problem concerning illegal provision of employment.
But the availability of independent market of labor market within the framework of
EU forces the countries, which suffer from the inflow of migrants (for example,
legalized in Italy or Spain), partially close their labor markets.
Migration policy within the framework of EU-15 is specified by such peculiar features:
1) Italy, Portugal, France, Germany, Spain, the Netherlands, Greece are
the countries-donors of labor power, as a consequence, the migration legislation
of the noted countries defines the backgrounds of rights’ protection of migration
abroad, measures concerning regulation of labor power arrival, access to the labor markets, etc;
2) Luxemburg, Ireland, Belgium, Germany, Austria, Latvia, Denmark,
Sweden, Finland are the countries-recipients of labor power. Migration legislation
of the given countries includes provisions concerning regulation of migrants’ arrival and stay in the country, creation favorable adaptation climate, development of
integration policy etc.
Common migration policy of EU defines the backgrounds of migration
flows’ regulation with the countries of the Third World at the same time when the
right of movement of citizens from EU member states remains inviolable.
Because of the lack of labor power in highly-qualified and un-skilled sectors, which
are based in Europe, the companies more frequently pay attention to the labor
markets of the developing countries, involving their citizens for work. If we consider the migration policy of EU-15 in more detail, we can see interesting tendencies. Thus, for example, countries-donors of labor power within the framework of
EU internal migration flows use liberal actions concerning migration flows management in the corresponding country. From the other side, countries which suffer from the migration flows apply more severe methods of regulation. In such a
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way, the structure of EU-15 migration policy by reference to migrants from the
countries of the Third World is as follows:
1) Countries with the liberal type of migration policy (Italy, Spain, Portugal);
2) Countries with the moderate type of migration policy (Ireland, Sweden,
Finland, Austria, Greece);
3) Countries with the conservative type of migration policy (France, Germany, Great Britain, Luxemburg, Belgium, Denmark, the Netherlands).
Figure 1
Scheme of the labor power market of EU-15 member states
in accordance with internal migration flows
Luxemburg, Ireland, Belgium,
Germany, Austria, Latvia, Denmark,
Sweden, Finland
Italy, Portugal, France,
Germany, Spain,
Netherlands, Greece
Source: developed by the author
Within the framework of the given types of policies to provide the fair
treatment to the citizens from the countries of the Third World, which live legally,
European Union should realize such priority measures:
1) to improve the legislative basis concerning provision of asylums for the
citizens from the countries of the Third World;
2) to provide mobility of the human capital and labor power exchange on
the basis of the principles and equality and partnership, promoting the development of the effective potential in the countries-participants of the migration process;
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3) to extend the programs of cooperation with countries, which activate the
migration flows into EU, namely with African countries, countries of Latin
America, and Caribbean Basin, Asia and develop the mutual approach concerning issues of migration;
4) to create conditions for circular migration, promoting the development
of the countries of destination and the countries of origin by means of migrants’
obtaining of new experience or financial capital and its application in the corresponding country;
5) to conclude agreements on social protection of migrants from the countries of the Third World;
6) to cooperate with the countries of the Third World, to provide the border
control management in the corresponding countries of destination and transit.
Until recently, many countries aimed at involving of highly-qualified migrants, providing such incentives for them as permanent place of residence and
reunification of families. Unskilled migrants are that category of citizens, which
receive the lowest benefits. At the time of economic crisis lots of countries of destination tried to diminish the flow of labor migrants, often as a result of the public
pressure or correcting the quantitative limits of migration, restricting the possibilities of migrants’ status change or renewal of permissions, applying the supplementary conditions concerning uncontrolled flows of labor migrants, realizing the
programs of migrants’ return.
Lots of countries of destination such as Great Britain, Italy, Portugal, and
Spain introduced lower quotas and more severe requirements of immigration.
Those measures also concern highly-qualified and unskilled migrants. For example, in February 2009, Germany abolished the labor market test for provision of
employment for highly-qualified migrants, if they were educated in the country or
German educational establishments abroad, the requirement concerning the
amount of investments for immigrants-investors was reduced from 500 tо
250 thousand euros [4].
Spain has adopted a new law on immigration in December 2009 року,
which speaks about more severe provisions on reunification of families. Within
the framework of the reform of migration legislation in July, Italy presented more
severe requirements concerning income (fixed at the level of minimum social income (5,3 thousands euros) and plus 50% of this amount for each member of the
family [4]) and medical insurance for reunification of families. Adult children and
parents older than 65can are allowed to enter the country, if they are maintained
by the migrants.
For EU market the import of human potential on a temporary basis is of
high priority. It is necessary to create favorable conditions for the legal temporary
provision of employment. Governments of countries introduce short-term programs in order to limit the entry into the territory of the country and persuade or
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even compel the migrants to return to their country of destination [11]. Lots of
countries accept the temporary migration programs. Temporary migration programs are often criticized for the advancement to the permanent migration. Improvement of the temporary programs includes such important elements as compact cooperation with the countries of destination and stronger incentives for the
migrants’ return as for example, mobile pensions. World economic crisis 2008–
2009 has demonstrated the necessity of such programs development, inasmuch
as in conditions of economic regress programs help to improve the situation concerning provision of employment for citizens.
Regulation of migration flows holds a specific place among the EU member states. The peculiarity of the noted migration flows is high motivated side, deficiency of visas, and absence of restrictions, possibility of residence change
without additional obstacles. Besides it, the specific feature of internal migration
within EU is its temporary character in comparison with external migration. Migration policy of countries under conditions of UE enlargement is essentially different, inasmuch as the countries conduct the opened policy, but it stipulates the allocation of employees from the countries, which later on joined EU, or the policy
of equality along with the migrants from the countries of the Third World. Nowadays the question, concerning regulation of migration flows from the countries
which later on joined EU is opened. Situation at the labor market requires the
system of control over migration flows even within the framework of EU member
states.
EU enlargement in 2004 and 2007 influenced on the strand of migration
policy. After the entry of new countries, the issues concerning migration flows accounting, problems of social protection, increase of competitiveness concerning
working places etc became urgent. Many countries reconsider their national migration policies because of intensification of migration flows from the countries
which recently join UE. Thus, after EU enlargement in 2004 Great Britain,
Ireland, Sweden opened access to their labor markets. Depend of the term of
stay in Great retain and Ireland or the type of employment, the migrants gain the
right to social transfers and access to the system of social welfare system. The
majority of the member states partially simplified the existed national regimes of
access. Sweden is the only country, which guarantees the free movement of employees, inasmuch as this country does not impose limitations on the quantity of
the issued permits for stay.
Some countries (Belgium, Germany, Greece, France, Luxemburg, Spain,
and Finland) conducted quite severe measures concerning migration. Thus, migrant from the country, which recently join EU, should apply for the work permit,
the decision will be positive, if there are no volunteers among local population or
citizens from the other EU member states. What about EU enlargement in 2007?
Ten member states (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Poland,
Slovenia, Finland, and Sweden) liberalized the access to their labor markets at
the early stages for the citizens of Bulgaria and Romania. Taking into considera-
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tion the complexity of questions, connected with the migration, the partial arrangements were defined by means of joining of EU enlargement agreements
2004 and 2007. They function according to the formula 2–3–2, for the first two
years after joining, the access to the member states labor markets for migrants
depends on the legislation in force and policy of the given countries. National
measures concerning migration policy can be prolonged for another three years.
If EU member state detects a violation of norms of labor market functioning, the
national measures of migration processes regulation are applied for a period of
two years [7].
At the modern stage after the enlargement, the process of realization of
the backgrounds of EU common migration policy was considerably dynamicized.
All EU member states work over their policies within the framework of realization
of principlesof free movement, inasmuch as it’s not simply a conceptual basis of
EU free labor market, but also a key precondition for the successful prosperity of
countries, which derive benefits from migration processes and promote the intensification of the world competitiveness of EU market.
With EU enlargement, European Commission began to develop the
neighborhood policy and in 2004 published the Strategic Plan aimed at extension
of cooperation with the new neighbors of EU. Within the framework of this approach, new neighboring countries have formed the Plan of Actions, which was
based on the already existed documents, such as agreements of cooperation
and partnership. Those Plans of Actions are the background for cooperation with
EU member states in the sphere of border control, management of processes of
legal migration, counter-trafficking in persons and management of employeesmigrants movement [6].
European Neighbourhood and Partnership Instrument (ENPI) will promote
the realization of the neighborhood policy in 2007-2013substituted the existed
themed and regional programs for the countries of the Third World. Assistance
within the framework of the noted policy will be channeled on the implementation
of the common programs in order to develop of the relationships among the regions of EU member states and neighboring countries. The model of assistance
within the framework of ENPI is based on the longstanding appropriation of
funds, partnership and total financing. It is expected that European Fund of Regional Development will take part in the co-financing of cross-border cooperation
within ENPI [6].
Therefore, the question, concerning common migration legislation within
EU-15 and EU-27 is the matter of argument. From the one side, EU requires
flows of migrants because of rundown of population and increase of the number
of disabled persons in EU. The inflow of low-paid manpower will support the stable development of EU member states. But together with the mentioned above,
migration causes the conflicts among the local population and migrants as well
as cultural and religious confrontations, which require the selective nature of pol-
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icy of countries sideways, the migration legislation. Besides it, the great cost
loading for the economy of the member states is the deportation of ineligible foreigners, the costs of for which should be channeled by the country on the integration of migrants in the countries of their destination (integration language, cultural courses). Taxation system of the countries requires migrants’ legalization.
To conclude the above mentioned, we may say that over the last years,
EU and member states gradually forms the fundamentals of general legal base
concerning issues of migration, provision of asylums and combating with irregular
migration. Nowadays, the principal tasks of EU migration policy are: development
of partnership relations with the countries of destination, transit, and origin; European-wide system of provision of asylums, which corresponds to the conditions
of Geneva Convention likewise liabilities of the member states in accordance
with the international agreements; fair treatment to the citizens from the countries
of the Third World (equal rights and liberties); complex approach in the migration
processes management.
Legislative basis of EU common migration policy requires permanent supplement in accordance with the new liabilities and modern conditions. Policy
should consider the needs of the national markets at the same time when the national migration policies should correspond to the general structure of EU migration policy. Common migration policy should be based on such principles as preciseness, transparency, justice, and should be channeled on the encouragement
to the legal migration. To realize these principles in practice, EU member states
should define clear and transparent rights of entry and stay in EU; provide information for potential migrants about their rights and duties as EU; provide support
and assistance in adhering of the conditions of entry and stay in the countries of
destination and origin; guarantee flexible European-wide visa policy.
In such a way, the common migration policy is aimed at: firstly consideration of the issue connected with migration in a broader context, taking into account the propulsive forces of migration flows and consequences of international
migration for the countries; secondly, consideration of the Commonwealth migration policy, influence of migration on the solving of the questions, connected with
integration into the Commonwealth, thanks to the external programs of cooperation; thirdly, demonstration of the probable changes in policy, which could improve the contribution of community into the more effective management of migration flows, including termination of irregular migration and human trafficking,
overcoming of xenophobic sentiments and discrimination, encouragement of legal migration.
Conclusion. Analysis of the political actions of countries should be considered from the point of view of long-term and short-term economic and demographic factors. Negative influence of the world economic crisis on the economy
of countries induced the governments to assume immediate measures both in
short-term and long-term perspective. The stickiness of the immigration control in
some countries of destination on the territory of EU should be politically attractive
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only in short-term perspective, but also it is important to consider the fact, that
the demand on labor migrants in EU in the long-term perspective will not lose its
actuality and European market will continue to attract migrants. To support the
competitiveness of economy, overcome the demographic problems and further
development of each country, EU member states should concentrate on advantages of migration. It is incorrectly to consider migration in the short-term perspective (problems connected with unemployment, level of unemployment, market pressure concerning local and foreign employees). World economic crisis has
changed the economy of countries not only from the point of view of negative
consequences but also caused considerable changes in the policy of countries,
making allowances into the migration policy of countries.
Government of countries should develop the policy of employment, taking
into consideration sectorial and occupational need of markets concerning labor
power, taking into account not only the economic factors, but also concentrate on
the human and social aspects of the evaluation of people’s work, extensively
deal уwith the irregular migration and promote the integration of migrants’ families into the social; life. Migrants should be protected from discrimination and
hate sideways the local population. Regular channels of migration flows should
be opened, and information concerning possibilities and risks of migration should
be acceptable to everyone in order to prevent the irregular migration and human
trafficking.
Sudden restrictions of migration flows can cause the serious disorders of
social and economic stability in the short-term period and slowdown of the indicators of economic growth in future, boosting expenditures for the searching of new
labor power and expenditures for education after the national economy’s surmounting the crisis. It can be especially dangerous in case of reduction of skilled
migrants. Recovery of national economies in the majority of countries will cause
their considerable restructurisation, with the further replenishment of labor resources by new professional skills and increase of innovations. Countries of origin can probably derive benefits from migration, if the systematic international relations among diasporas of academic communities and local scientists, including
temporary exchanges among the countries ensured.
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3. Драгунова Т. Характеристика трудового потенціалу населення Східного
Поділля та Центрального Придніпров’я / Т. Драгунова, Л. Чвертко //
Україна: аспекти праці. – 2008. – № 7. – С. 38–45.
4. Малиновська О. А. Міграція в умовах глобальної фінансово-економічної
кризи / О. А. Малиновська // Регіональна економіка. – 2010. – № 2. –
С. 123–133.
5. Овчиннікова О. Р. Моделі і методи для організації досліджень потенційної міграції населення: авторефер. дис. на здобуття наук. ступеня канд.
екон. наук: спец. 08.03.02 «Економіко-математичне моделювання» /
О. Р. Овчиннікова. – Хмельницький, 2003. – 20 с.
6. Огляд трудової міграції в Україні, Молдові та Білорусі// Міжнародна організація з міграції. – Київ. – 2007. – С. 24.
7. Офіційний сайт ЄС. [Електронний ресурс]. Режим доступу:
http://ec.europa.eu/economy_finance/publications/publication14287_en.pdf.
8. Позняк О. Групові міграції в Україні: сучасний стан, проблеми, перспективи / О. Позняк // Економічний часопис. – 2010. – № 2. – С. 34–48.
9. Хомра О. Структура і напрямки міграційних потоків населення України /
О. Хомра // Економіка України. – 2010. – № 3. – С. 24.
10. Starc O. The Migration of Labor.Cambridge: Basic Blackwell, 1991.
11. Stephen Castles, Simona Vezzoli.The global economic crisis and migration:
temporary interruption or structural change?/Unpublished Manuscript for
Paradigmes (Spain)/Issue no. 2 / June 2009. – 68-75 p.
12. Todaro Michael P. Internal Migration in Developing Countries. Geneva:
International Labor Office, 1976.
JOUR NAL
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o f
Vol. 10 (№ 4). December 2011
Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
Viktor HERASYMENKO,
Svitlana HALASIUK
LICENSING OF THE TOURIST ACTIVITY
IN UKRAINE WITHIN THE CONTEXT
OF THE INTERNATIONAL PRACTICE
Abstract
The place and the role of licensing of the tourist activity in the system of
Governmental tourist management are considered. Modern approaches to the
protection of the rights and legitimate interests of the participants of tourism market in different countries in the world and in Ukraine are analyzed. Particular arrangements, aimed to improve the tourism policy in Ukraine are suggested.
Key words:
Licensing, tourist activity, tour operators, Travel Agents, international practice of licensing.
JEL: L83.
© Viktor Herasymenko, Svitlana Halasiuk, 2011.
Herasymenko Viktor, Candidate of Economic Sciences, Assistant Professor, Odessa National Economic University, Ukraine.
Halasiuk Svitlana, Candidate of Economic Sciences, Assistant Professor, Odessa National Economic
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Licensing as the means of governmental management in the tourism field
is used by many countries worldwide. The necessity of a prompt cooperation of
the subjects of tourist activity and governmental authorities is due to the high
consumer risks in the tourism field, which request the usage of special defensemechanisms of both tourists’ rights and interests and enterprises-business partners. The way of obtaining the optional document and instituting the tourist activity differs in different countries and depends on a certain group of factors, such
as: governmental tourism management model, development of the general basis
of legislative acts, maturity and structuredness of the tourism market, availability
of the Associations for Tourism business, etc. The search for the rational licensing system in the tourism field based on researches of the international experiences is also of current concern for Ukraine, which, willing to develop tourism actively, is in condition of constant administrative reforms. Questions, related to the
licensing in the tourism field were covered by leading Ukrainian and foreign scientists, who dedicated certain parts of their scientific works to the present research. Thus, V. Kyfiak in his book «Organization of tourist activity in Ukraine»
analyses the main points of legislative documents in licensing in tourism field for
several years [1, p. 113–118]. Composite authors (Y. Rudiak, V. Kuznetsov,
A. Klimenko ) of the book «All things about accounting and organization of the
tourist activity» systematize the main points of valid legislative acts, that should
be used in practical activity in the tourism field [2, p. 26–46]. International experience in licensing as a form of governmental management in tourism field is examined by Ukrainian scientists M. Malska, N. Antoniuk, N. Hanytch in the textbook «International tourism and service industries» [3, p. 525-529], and also by
the group of Russian scientists in the textbook «Economy and tourism management» [4, p. 291–295]. Meanwhile, a set of questions is still open respecting the
search of rational system of cooperation between government body and tourism
business representatives regarding the creation of favorable conditions for their
activity in behalf of tourist services’ consumers.
In the process of writing of the article the thoughts of skilled practitioners in
tourism field [5] are taken into consideration, and valid legislative acts in tourism
management licensing in Ukraine and some foreign countries, printed in business papers or posed to official websites, are used.
The aim of the article consists in making contrastive analysis of foreign
and national licensing practice in tourism field in order to elaborate practical recommendations regarding the improvement of defense-mechanisms of both rights
and interests of all participants of Ukrainian tourism market.
Tourist activity licensing in our country was launched since 1990s and outlasted great changes. For the first time, tourist activity licensing was included into
the licensed activities based on the Act of Ukraine «On entrepreneurship»,
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Licensing of the Tourist Activity in Ukraine
Within the Context of the International Practice
granted any activity related to tourism service supply liable for licensing; whereas
not only intermediator-firms but also accommodation facilities, catering facilities,
transportation utilities, etc. were considered as licensees. Within next several
years either separate kinds of tourism (international, outband, domestic tourism,
sightseeing) or certain forms of activity (tour operator activities and travel agency
activities) were licensed, which process was accompanied with necessary legal
documents’ ratification. Yet, in October 2010 legislative licensing framework in
the tourism field was set up-to-date as a consequence of implementation of the
Act of Ukraine «On implementation of certain legislative changes regarding limitation of governmental management in economic activities» [6], according to
which tourist activity licensing was invalidated. Thus, currently the only tourist activity which is tour operator activity is subject to licensing in Ukraine. Nevertheless, it should be noted that in 2009–2010 considerable changes were implemented into the legislative base of economic activity’s licensing regarding the
simplification of conditions of business conduct in Ukraine. For example, package
of documents was cut, essential for inducement of activity in tourism field. The
unlimited period of duration of tour operators’ and Travel Agents’ license was set,
and a single paid amount for licensure was determined [7]. That’s why, from our
point of view, tourist activity licensing in Ukraine doesn’t have any direct connection with deceleration of small and medium business development.
It is notable that professionals in tourist activity express contradictory opinions regarding the abolition of tourist activity licensing in our country. Upholders
of the abolition note that the licensing procedure is formal; it doesn’t guarantee
the diligent Travel Agents’ work and doesn’t exclude fly-by-night companies’ appearance.
Representatives of the opposite viewpoint insist that the abolition of tourist
activity licensing can lead to disorderliness in tourism market, caused by Travel
Agent’ expansion in the number, non-professional conduct of business, acts of
dishonesty.
Furthermore, despite different points of view, all the practitioners are of the
same idea: both tour operators and Travel Agents will have difficulties with activity implementation. Tour operators have the full responsibility for tour product
creation and its realization, that is why they are supposed to conduct regulations
with only reliable partners, after verifying their work experience in tourism market,
their employees’ qualification, sales volume, etc. Travel Agents have the special
demands advanced from every tour operator regarding the sales volume enhancement, lower purse fixation and its payout time postponement, passing of
certification procedure, admitted by certain alliances for tour operators [5].
In such a case it seems necessary to fix our attention on researching
questions, related to different sorts of tourist activity under licensure; executive
authorities in tourism field, tools for financial assurance of Travel Agents’ respon-
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sibility; practices of creation of Associations for tourism companies in Ukraine
within the context of international practice.
International practice shows that countries leading in the tourism field use
different approaches to the tourism licensing: from establishment of strict command-administrative methods of state control of concessionaires’ activity in tourism field to limitations in implementation of the only type of tourism. Thus, in Math
laysia, which lies in the 9 place in top rank regarding the foreign tourist arrivals
among 28 tourism markets of the world, the state tourism policy is determined by
specially created Department of Tourism, under the jurisdiction of which the Department of Licensing is. It is capable of wide credentials even to the determination of the tourism companies’ optimum quantity. According to the Tourism Act of
Malaysia, the activity, performed by tour operators, travel agents, by means of
accommodation, catering facilities, transportation utilities, staff training institutions for tourism field, activity of experts in tourist escort, etc., is under licensure.
In this way, licensing in this country includes the state control not only of agency
business in the tourism field, but also of counteractants’ work, which are basic
producers of tourism services [8].
th
In Turkey, which lies in the 7 place in top rank regarding the foreign tourist arrivals, the tourism industry is under the jurisdiction of Department of Culture
and Tourism, which determines the main directions of tourism economy development. It is responsible for marketing activities execution and realization of incentive measures for tourism popularization. In Turkey, Tourist companies’ activity is under licensure, and the license is given by subject ministry after compulsory registration of the company in the social agency of Turkey tourism companies «TÜRSAB».
According to the Act of Turkey «On tourism Agents and tourism Agents’
Association» there exist three kinds of licenses depending on services, performed by tourism companies:
•
type A licence is given to tourism companies, performing the tour organization services package (tourist transportation and accommodation, recreation and organization of sports activities) and designing
tours;
•
type B licence is given to tourism companies arranging sales of tickets
for international overland transportations, shipping services and air
services, and saling excursion;
•
type C licence is given to tourism companies arranging in-house tours
for native citizens.
Furthermore, all Turkish license holders are given an advance licence
permitting the activity within the space of two years, which can become valid one,
on the assumption that a tourism company gets a certain sum of money in foreign currency [9].
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st
Governmental regulation of tourist activity in France (1 place in top rank
of the foreign tourists’ arrival) is determined by Department of Economy, Industry
and Employment, within the frames of which the Travel Agency for Development
«Atout France» was created. It was entrusted with licensing responsibilities in the
tourism field and introducing of the Unified register of tourism companies. According to legal system of France the activity of legal entities and private entrepreneurs is put under licensure, who: complete and implement group and individual tours, accomplish the mediation in selling of certain services within the tour
(accommodation, transportation, nourishment); furnish services related to the
tourist reception (including visiting museums and items of interest), furnish services in caring of fairs, exhibitions, conferences and other similar events related
to the activity implementation in the tourism field.
Unlike licensing conditions adopted in Malaysia, according to legal system
in France, legal persons and individual entrepreneurs can’t be subject to licensing in the tourism sector, who furnish services produced by these persons; persons, selling tickets for certain modes of transport for the account of one or several shippers; persons, effecting sales of services at the price paid (i. e. not having any financial gain from the executed operation) [10].
Another requirements for licensing in tourism sector are in operation in
th
Great Britain (6 place in top rank of the foreign tourists’ arrival), where the central body of executive power in tourism sector is the Department of Cultural Affairs, Mass Media and Sports, within the frame of which the «VisitВritain» acts. It
is notable that this national tourism administration (NTA) has mixed financing:
about two thirds of its budget come from means received form the State, another
third comes from commercial activity, e. g. booking of tourist services on the corporate sites, as well as maps, travel guides, souvenirs selling. It should be emphasized that the present state-private structure organizes a long-term strategic
partnership with British tourism industry, whose most influential representatives
are included into the board of directors of «VisitВritain».
The majority of tourism companies of Great Britain have the «ATOL» license (Air Travel Organisers’ Licensing) – a document, given by the Civil
Aviation Authority (CAA) for tour organizing. The «ATOL» corresponds to a financial scheme of air travelers’ protection, including the tourism company bankruptcy remoteness. It helps to pay back the tourists for short-received services
and helps them to get back with minimum delay. Within this scheme the license
owners enter a certain amount of money for each customer in order to create a
guarantee fund, located in the CAA Trust Ministry, furnishing the needed compensations in case of financial inability of the tourism company, owing the license. Member’s subscription for tourism companies is, as follows, 10 % of their
annual turnover. Moreover, companies should set up an account and hold for the
account not less than 5 % of working capital.
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It should be noted that licensing practice existing in Great Britain differs in
many matters of detail from practices in other countries:
•
the Civil Aviation Authority, not the central body of executive authority
in the tourism sector, operates as the licensing body;
•
the licensing activity is put under licensure of tour operators, creating
international tours using the air services (to organize tours with domestic air travels and international travels with ocean shipping and surface
transport there is no need in getting license);
•
for Travel Agents furnishing tours of licensed tour operators, the
«ATOL» license is not necessary, still, while cooperating with foreign
Supply organizations who don’t submit to the British laws, dealers
should have the similar document;
•
the validity of the «ATOL» license doesn’t apply tourists, who buy air
tickets exactly in the air company, i.e. without tourism company assistance. This is a great detriment of the present system of customer protection [11].
With regard to the protection of customers of tourism services, many countries worldwide, including those who don’t implement licensing in the tourism field
at all, set certain rules of financial responsibilities of tourism companies to the
customers. In Ukraine, as is well known, an obligation to effect the financial assurance (in terms of BG or some other credit establishment) is extended both to
the tour operators and travel agents. An array of two reasons is considered to be
a warranty case: uprise of financial insolvency of tour operator (Tour Agent) or
breach of the company’s bankruptcy process, as well as default of its obligations
to the tourists. The low-limit of financial assurance should consist of the amount
equivalent to € 2000 minimum for tour operators, Travel Agents and € 10000 for
tour operators, furnishing services in domestic and inband tourism exceptionally.
Nevertheless, the present amounts of financial guarantees do not correspond to
the certain tour operators’ range activity, especially if they are large. In addition,
according to the Ukrainian Law, tour operators, in case of their financial insolvency, or, as a consequence of nonfullfilment of treaty commitments to the tourists, related to the failure to provide services, have right to settle accounts only
within the frame of financial guarantee; in case of overrun of the sums of tourists’
requirements over the financial guarantee, a satisfaction of tourists’ requirements
is effected pro rata basis – i. e. Travel agencies may not compensate for customers’ losses in full [12]. Thus, in our country, a financial guarantee amount
does not depend on volume of sales of their services and products, and this prevents considerably an actual protection of tourists’ rights and interests in Ukraine.
While making a research of the world experience of the assurance of the
tourism companies financial responsibilities, certain particularities were elicited of
the mechanism implementation in some countries. Thus, for example, every Ma-
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laysian tourism company should have a document about the financial guarantee,
whose sum depends on two attributes – office location (in big cities or suburbs)
and type of activity (organization of home tourism, outband tourism or tickets
sells for all types of transport) [8]. As well as in Malaysia, Turkish tourism companies are expected to have the financial guarantee of their responsibility owed
to the tourists, nevertheless the way of its sum determination depends only on
the license type: 7000 TRY for «A» license, 6000 TRY for «B» license, 5000 TRY
for «C» license [9].
Unlike license provisions in Malaysia and Turkey, the financial guarantee
amount set for tourism companies in France depends on the year sales volume.
In case of substantial modification in service industries during the year (e. g. in
connection with opening of a branch office, range of services spread, etc.), the licence holder is expected to inform his warrantor about it in order to review the financial guarantee amount [10].
Among countries, where there is no tourism services licensing, but the
mechanism of the financial guarantee of tourism companies’ responsibility is applied, the experience of Austria is remarkable, whose tourism industry is under
the jurisdiction of the Department of Economy, Family and Youth. The Statute
concerning insurance of tourism companies is in force in the country, which regulates indemnity to the customer and his repatriation in case of bankruptcy or insolvency of the tour operator. Risk coverage can be effected by two ways – either by making terms about insurance with Insurance Agencies, or execution of
an agreement about bank guarantee with credit companies.
According to legislation in Austria, financial guarantee amount of the tour
operator depends on the sells volume of tourism services realization of previous
year and is counted on such a scale: in the setting of revenue of € 110 000 the
financial guarantee amount is € 10 000, less € 220 000 – € 20 000, less
€ 330 000 – € 30 000, in the setting of revenue more than € 330 000 – the financial guarantee amount is 8 % of the tour operator sells turnover, but not more
than € 72 600. If a tour is organized with the use of charter flights, the financial
guarantee amount of Austrian tour operator comes to 10% of sells volume, but
not more than € 363 000, i. e. certain limits exist in this country regarding maximum amount of financial guarantee of the tourism company’s responsibility [13].
For instance, the State which countermanded the tourist activity licensure
is the Russian Federation, where the central government executive authority in
tourism field is the Ministry of Sport, Tourism and Youth policy, and the national
tourist authority’s duties are carried by the Federal Tourism Agency. It should be
noted that, at the present time, Travel Agents’ activity is not subject to inspection
of «Russian Tourism». At the same time, to carry on the Travel Agents’ activity,
an entering of the contents of certain company into the Unified Federal Register
is required. However, tour operator is absolutely responsible before tourists for
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his own actions, as well as for his partners’ actions, including Travel Agents, carrying the tourism products marketing.
In order to intensify the state supervision of tourism activity organizing in
the Russian Federation, the Decree of the Cabinet of the Ministers of RF «Concerning approval of the rules for provision of tourism services’ was adopted. The
principal provisions of the actual regulatory legal act are related to the requirements for companies of the tourism industry, rules for feeding information about
the tour product and also procedure for making and terminating contracts about
tourism services sales, procedure for reclamation and definition of liability of the
parties, which signed the contract.
To add a tour operator to EDF the responsibility capital evidence is requested, which can be provided either as a bank guarantee or as an agreement
for possible risks insurance. At this, the financial guarantee amount depends on
types of tour operator activity: for those tour operators, who accomplish their activity in the field of international and domestic tourism, this amount consists of
10 million rubles, for those tour operators, who accomplish their activity in the
field of domestic tourism only, this amount consists of 500 000 rubles. To list a
tour operator on EDF, the provision of application in written and a package of
documents are needed. Basic documents are: State Registration Certificate of
legal entity, constitutive documents, registration certificate from a tax authority, a
taxpayer identification number, financial provision reference of the tour operator’s
responsibilities, assignment order of tour operator managing director, information
on tour operator’s and its structural subdivisions’ location [14]. Thus, though the
tourism activity licensure in the Russian Federation is abolished, this State has
got certain controls for tour operators’ activity management, whose financial
guarantee amount is ten times above the standards, existing in Ukraine. Besides,
an international practice proves that countries, leading in the tourism field, don’t
limit their responsibility guarantee granting within the frames of legislated norms,
but, on the contrary, create field-oriented social organizations in order to support
the tourism business development. Thus, in Austria, tourism companies have
right to create tour operator insurance Alliances. Whereas the minimum amount
of their general financial guarantee should come to € 3600000, on condition that
the financial guarantee amount of each member of the Alliance decreases to 3 %
of the legal norm [13].
In Great Britain, the most influent non-governmental tourism organization
is the «Travel Association», which incorporates on a voluntary basis more than
5000 Travel Agents and at about 900 tour operators. With a view to strict requirements, suggested by the Association for tours safety, bailout package, and
financial safety of tourists, the membership in the present structure becomes a
guarantee of high quality service, reliability and stability. Alongside with numerous advantages, gained by «Travel Association» members, they are imposed serious obligations on, regarding conformity to certain financial and professional
standards. A customer protection system, suggested by the Association, in case
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of the bankruptcy of a company- member of «Travel Association» was accounted
to be the best in the world. At the meantime all the members of the Association
are expected to deposit a pledge to the Social fund, with means of which the remuneration is paid to tourists in case of company’s bankruptcy. A pledge can be
issued in three ways:
•
a tourism company deposits a certain sum to the trust account of the
Association; nonetheless the tourism company is not allowed to make
use of these money, but is allowed to collect interests (as a rule, this
method has mainly in view powerful companies);
•
a tourism company takes out an insurance policy for the sum required
and pays up an insurance contribution yearly;
•
a tourism company draws upon a credit in order to pledge a certain
sum to the trust account – whether with asset-based lending or with
managing board personal guarantee; in which case a yearly contribution is well below than with an insurance policy, but in case of a company’s bankruptcy the managing board is absolutely responsible.
As an additional guarantee, the «Travel Association» developed the own
compensation insurance system, allowing to increase funds in case when the
household demand deposits’ sum would be inadequate to repay a debt of the
bankrupt company [11].
It should be noted that among tourism business-professionals in Ukraine
questions are brought up about furnishing additional financial guarantees by tourism companies, in particular by Travel Agents, whose license was cancelled, for
instance, by depositing a certain amount to the special tour operator’s account.
Managing directors of a number of tourism companies agree that all the market
participants should reach an understanding and develop foundations of the uniform self-regulation system in the tourism field, which is not conform to applicable
legislation in Ukraine [5]. In our country, several tourism industry entities operate
nowadays, among whom the most powerful are: «Tourist Association of Ukraine»
(«TAU»), «Association of Leaders of Tourist Business of Ukraine» («ALTU»),
«All-Ukrainian Association of Tour Operators», «Alliance for Tourism Industry
Professionals». The «TAU», operating in Ukraine since 1998, incorporates more
than 350 leading tourism companies, among which are counted the tourism
companies, hotel complexes, air companies, educational institutions, specialized
mass media, health resort institutions, social agencies, representing almost all
the regions of our country, and also certain foreign tourism companies from Russia, Poland, and the USA. The «TAU» Association deploys an All-Ukraine tourism professional program «Crystal Stork», under the terms of which «the best
companies of the tourism industry, their employees, and those who creates a
tourism-development strategy, provide information about tourism industry in
Ukraine and promote the domestic tourism, are rewarded according to the results
of yearly contests» [15].
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The «ALTU» Association, created by leading Ukrainian tour operators in
2007 as a professional Association of tourism entities, developed its own system
«Mark of Quality of ALTU», which foresees setting requirements for travel agencies regarding the tourist rights security and is directed to the improvement of the
quality of the tourism industry’s services.
«Alliance for Tourism Industry Professionals», which since 2010 unites
about 80 Travel Agents, in conditions of market deregulation, suggests an implementation of the system of competency assessment of travel agencies’ employees, which should be administered by independent establishments.
Beside specialized associations in Ukraine, a chain of travel agencies and
tour operators expands widely. Thus, in 2009, the company «TUI-Ukraine» entered the Ukrainian tourism market. This company is included into the system
«TUI» (Touristic Union International), the leading tour operator not only in Germany, but also all over Europe. It should be emphasized that, unlike in our country, where the exclusivity of tour operators’ activity is applied, the mode of operation of all German large concerns of the tourism industry consists in existence of
the own air company, system of accommodation means and transport means. All
this makes them capable to centralize their activity and furnish their clients a full
service package. Thuswise, the «TUI» tour operator effects its activity in more
than 180 countries worldwide, providing services for more than 30 million clients
yearly, holds 261 hotels with 170 000 rooms, owns 143 planes and about
3500 retail stores all over Europe. The «TUI» arranges the labor for 49 000 employees in all the continents, including Ukraine [17].
But, despite the appearance of specialized associations in Ukraine, their
influence on the tourism market members is still marginal, and the standards for
their activity implementation are not regulated completely. According to the data
from former State tourism and resort service, in 2010 in our country 7887 travel
agencies were functioning, only a minor part of which became a part to specialized associations.
According to experts’ estimates, the tourist activity licensure cancellation
led to considerable increase of these very companies; nevertheless, official data,
conforming this conclusion, do not exist for lack of statistical observation, that
should be made by central regulatory agency in tourism field. We should note
that during last several years in Ukraine the constant reorganization of institutions, entrusted with tourism field management was made. Thus, the tourism field
in our country during the period from 1991 to 2011 underwent eight main
changes of bodies, responsible for its development, – starting with the fourth
paradigm, characterized by absence of central executive body in the tourism industry, and the third paradigm (National Tourism Organization affiliated to the
government). As a result of the administrative reform which lasts in Ukraine since
December of 2010 the tourism industry is subordinated to the Ministry of Infrastructure, within the frame of which the Ukraine’s State Agency for Tourism and
Resorts operates [18], but the information posted to the official web site of central
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executive body doesn’t allow to make conclusions on the tourism development in
the State.
In conclusion it stands to mention that the divergences in the legislative
framework of licensing activity of travel catering in the countries worldwide mainly
depends on the level of State management of the tourism industry. Thus, if the
country pays great attention to the very development of tourism industry, the licensure body of law comprises a great part of subjects to licensing and
licencees, including travel services not only of the travel agencies, but also accommodation means, catering facilities, transport organizations and entertainment facilities. From another viewpoint, if the State doesn’t’t manage the tourism
development, the licensing as a form of tourism industry control is not used.
Nevertheless, in such cases other methods are involved by legal bodies regarding the consumer protection system, tourism service and product industries, e. g.
inducement of the arrangements for financial guarantees of tourism companies’
responsibility. Besides, in countries, where the legal system is at a high level, the
minimization of the influence of central executive authorities is observed on the
economic entities. It gives them an opportunity to associate in public organizations in order to set their own service standards and protection systems for consumers and tourism business-partners.
Consequently, based on the examination and generalization of the international practice in tourism activity licensing, it seems appropriate to take following
measures, aimed to improve the tourism policy in Ukraine:
•
implement at the level of legislation the alternative methods of protection for consumers and tourism business-partners, – for example, by
means of maintenance of a State register of tourism entities with a
view to fill in information about travel agencies;
•
stimulate creation of social organizations, consolidating tour operators
and Travel Agents, capable to influence the tourism industry development;
•
change approaches to tour operators’ guaranteeing of their public liability to tourists by setting financial guarantees, amount of which
should depend not only on type of tourism activity, but also on tourism
services volume;
•
revoke the legislative regulation as for exclusivity of tour operators’ activity, in accordance with which tour operators don’t have a right to furnish accommodation services, catering facilities, transportation services, etc., that influences considerably a deterioration of the service
quality for tourists’ satisfaction;
•
perform a constant experience interchange with other countries regarding questions in the field of tourism industry licensing, financial
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guaranteeing of tourism companies’ responsibility, implementation of
standardization and certification procedures in tourism industry, improvement of mechanism of government regulation.
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4. Экономика и организация туризма. Международный туризм : учебник /
[Е. Л. Драчёва, Ю. В. Забаев, Д. К. Исмаев и др.]; под ред. И. А. Рябовой,
Ю. В. Забаева, Е. Л. Драчёвой. – М. : КНОРУС, 2005. – 576 с.
5. Новини турбізнесу [Електронний ресурс] / Режим доступу: http://novostiturbiznesa.info/article.
6. Про внесення змін до деяких законодавчих актів України щодо обмеження державного регулювання господарської діяльності : Закон України
від 19 жовтня 2010 р. // Урядовий кур’єр. – 2010. – № 214.
7. Про внесення змін до деяких законів України щодо спрощення умов ведення бізнесу в Україні : Закон України від 15 грудня 2009 р. // Відомості
Верховної Ради України. – 2010. – № 9.
8. Міністерство туризму Малайзії [Електронний ресурс] / Режим доступу:
http://www.tourism.gov.my.
9. Міністерство культури і туризму Туреччини [Електронний ресурс] / Режим доступу: http://www.turizm.gov.tr.
10. Міністерство економіки, промисловості і зайнятості Франції [Електронний
ресурс] / Режим доступу: http://www.tourisme.gouv.fr.
11. Міністерство культури, засобів масової інформації та спорту Великої
Британії [Електронний ресурс] / Режим доступу: http://www.culture.gov.uk.
12. Ліцензійні умови провадження туроператорської та турагентської діяльності: Наказ Державного комітету України з питань регуляторної політики
та підприємництва та Міністерства культури і туризму України від
11 вересня 2007 р. // Офіційний вісник України. – 2007. – № 74.
414
V i k t o r
S v i t l a n a
H a l a s i u k
13. Міністерство економіки, сім'ї та молоді Австрії [Електронний ресурс] /
Режим доступу: http://www.en.bmwfj.gv.at.
14. Міністерство спорту, туризму та молодіжної політики Російської Федерацій [Електронний ресурс] / Режим доступу: http://www.russiatourism.ru.
15. Туристична асоціація України [Електронний ресурс] / Режим доступу:
http://www.tau.org.ua.
16. Асоціація лідерів турбізнесу України [Електронний ресурс] / Режим доступу: http://altu.com.ua.
17. Туристичний оператор «TUI Україна» [Електронний ресурс] / Режим доступу: http://corp.tui.ua.
18. Галасюк С. С. Стандартизація, сертифікація туристичних послуг та ліцензування туристичної діяльності : навчальний посібник / С. С. Галасюк. –
Одеса : Астропринт, 2011. – 208 с.
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Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
Macroeconomics
Oleksandr KRUTYLKO
MAIN TRENDS OF IMPROVEMENT
OF INVESTMENT ATTRACTIVENESS
OF UKRAINE’S ECONOMY
Abstract
The comprehensive analysis of investment climate in Ukraine in comparison with other countries is conducted; the potential for attracting of foreign direct
investments in Ukraine is defined. On the basis of study, the basic factors of unfavorable investment environment are formulated and the ways to improve it are
suggested.
Key words:
Foreign direct investment, investment potential, innovation, innovation development, Ukraine, countries of Central and Eastern Europe.
JEL: F21.
© Oleksandr Krutylko, 2011.
Krutylko Oleksandr, Ivan Franko National University of L’viv, Ukraine.
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Main Trends of Improvement
of Investment Attractiveness of Ukraine’s Economy
Problem definition. Over the recent years in the practical and theoretical
activity, the specialists and scientists pay great attention to the problems of construction of the effective system of foreign direct investments involvement. At the
same time, Ukraine is among the countries with the unattractiveness investment
climate, which is proved by the range of international evaluations and ratings.
Therefore, there is a problem concerning deepening and acceleration of economic and regulatory reforms implementation in Ukraine.
Problem examination. The question concerning development of investment potential of Ukraine and activization of the foreign direct investment inflows
into the national economy is of current interest. Among foreign scholars, this
problem was examined by S. Hlinkina, H. Grey, M. Kopitsova, R. Міrdala,
J. Regnitzer, V. Shabanov and others. Among native scientists, such scholars as
S. M. Kadochnykov, V. V. Koziuk, V. V. Melnyk, O. M. Mozhovyi, A. M. Poruchnyk, N. O. Tatarenko, V. H. Fedorenko, A. S. Filipenko investigate the improvement of investment climate of Ukraine. But these researches are not completed
inasmuch as Ukraine faces new internal and external challenges, which require
the search of new decisions and instruments of foreign direct investments involvement.
Topicality of investigation. Foreign direct investment is an effectual resource of functioning and development of economy. Ukraine needs foreign capital. But to provoke the foreign investor’s interest, it is necessary to provide all favorable conditions of foreign direct investment. In Ukraine, the business image
should be changed. All efforts of the country should be channeled on the provision of favorable conditions of national and international business doing.
Task definition. This paper is aimed at conducting of analysis of Ukraine’s
investment environment, discovering the factors, which interrupt the process of
involvement of foreign direct investments into Ukraine’s economy. On the basis
of the experience of other countries, in particular, countries of Central and Eastern Europe, the ways of investment crisis overcoming are proposed and the
methods of increase of the volumes of foreign capital involvement are determined. In the process of investigation, the methods of comparison, grouping,
benchmark, selection likewise graphical method is used.
Material statement. After the independence of Ukraine was proclaimed,
the course of Ukraine’s integration into EU was adopted. It provides the adhering
to European principles of democracy, economic liberties and transparency of
country for the economic investors. Involvement and encouragement of direct
foreign investments was and still remains the important component of the program of economic reforms implementation in Ukraine, transformation of economy
and adaptation of economy to the European standards. In order to create and
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improve the national investment environment, the number of laws and normative
acts, which define the regime of investment activity in Ukraine, were adopted.
The Laws of Ukraine «On investment activity» (1991), «On regime of foreign investment» (1996), «On trans-border cooperation» (2004) and others are framework. They define the main principles of foreign direct investment involvement
and regulation of activity of foreign investors in Ukraine.
Except basic laws and numeral amendments to them, about 20 Orders of
the president of Ukraine and 35 Resolutions of the Cabinet of Ministers were approved and aimed at improvement and simplification of regulation of foreign investors’ activity. But often the policy of the country in the given sector is inconsistent and contradictory and complicates the investment activity. The example is
the Law of Ukraine «On formation and functioning of special (free) economic
zones» (SЕZ) (1992), which provide considerable benefits for enterprises with
foreign capital. This Law was actually abolished in 1996. The noted Law became
a boost for the active development of SЕZ – during their activity the assignments
to the budget increased two-fold, the total production – six-fold employment –
three-fold. But often abuses caused the full repeal of benefits, reformation, or
even liquidation of SEZ [2].
Foreign investors consider legal, political and economic unpredictability as
the considerable disadvantage of investment environment of Ukraine. Ukraine
belongs to the countries with extra investment risks [11]. In accordance with the
indicator of unauthorized disclosure of corporate information and the level of
right of property provision Ukraine ranks No 60 among the 70 biggest countries
of the world [3]. The level of trust to the judicial system, corruption and protection
of intellectual property rights and also is a source of concern for foreign investors
[11].
In accordance with the results of the conducted research concerning market conditions, European center has evaluated the entrepreneurial risk in Ukraine
in 75% and depicted a tendency to its deterioration. The main negative factors of
investment environment of Ukraine are imperfection of legislation in the sphere of
corporative governance, complexity of the system of registration, nontransparency of information about stock holders, frequent choices of forcible
takeovers of enterprises etc. Overall, the majority of expert evaluations points out
the law investment attractiveness of Ukraine for foreign investors [1].
The ponderable structural problem of foreign direct investment in Ukraine
is the extensive nature of their direction. Thus, the share of foreign capital, which
comes to enterprises, was reduced after 2003 for more than two-fold (machine
manufacturing, light and food industry – three-fold, infrastructure – two-fold, metallurgic, oil, chemical industry – 1,5-fold). At the same time, their receipt into the
real estate was reduplicated and into financial sector – was tripled [5]. In spite of
such increase of financial and banking sectors, they entered an economic recession during the economic crisis. Until 2008, 40% of capital of Ukrainian banking
institutions was in ownership of foreign investors.
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The similar situation was in the countries of Central and Eastern Europe
(CEE) – Hungary, Estonia, Lithuania, Latvia, and Bulgaria, where banks did not
have the needed support from the foreign owners of assets. More obviously, the
negative consequences of foreign direct investment involvement appeared in
Hungary, where the share of foreign capital in individual industries of economy,
including banking sector before the entry to EU was 70–100%. Foreign companies continue to channel investments into leasing, insurance companies, banking
sectors, trade networks. But they were no economically effective for the country
and Hungary among the countries of CEE overcame the consequences of the
crisis very hard. Тhus in 2004-2008, the increment of growth of foreign direct investment into Hungary was one of the highest in the region, and the rates of
growth of GDP in that period amounted to only 1,3 %, 2,5 less than on an average in the countries of CEE [4].
Taking into consideration the given experience of the CEE countries,
Ukraine has to take a balanced approach to the involvement of foreign capital,
and to reinsure itself from the similar misbalances by the system of formation of
priorities for the foreign investors. It is necessary to promote them to the investment into the sectors of real economy with the reorientation from extensive to intensive, infrastructural and innovation directions, which require capital investments.
To achieve the noted target, there are lots of preconditions in Ukraine: expedient geopolitical location, skilled manpower, rich natural resources, dissatisfied consumers’ demand, undersaturated market of goods and services, competitive weakness of domestic producers. In according with some ratings, Ukraine
belongs to the number of countries with great potential of foreign direct investments involvement. For example, in accordance with the globalization index,
which is annually, formed on the basis of 14 of political, economic and social indicators of the Magazine Foreign Policy, among 72 the biggest countries, which
produce 90% of the world GDP, Ukraine ranks 43 place [12]. In accordance with
the index of potential of foreign direct investments involvement, which is defined
by UNCTAD, Ukraine ranks 48 place among 141 countries [15].
International Bank for Reconstruction and Development and International
Finance Corporation calculated the possibilities of Ukraine concerning involvement of foreign direct investments, which amount to 100-120 billion of US dollars
[7]. But in reality the given potential is used insufficiently (Figure 1).
For the period of the most dynamic development of Ukraine’s economy
(since 1999 till 2008) the volumes of foreign capital involvement increased tenfold. But it was insufficient for the beginning of the industry renewal – the share of
the fifth technological mode in the production, which in developed countries occupy more than third, was reduced in Ukraine during that period from 3 tо 2% [8].
The peculiarity of the foreign direct investment into Ukraine is the receipt of the
prevail share of foreign capital to the already existed enterprises by means of pri-
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vatization of the state-owned property. Only less than 10 % are channeled into
the establishment of new enterprises (greenfield investment). This percent is
considerably different from the average European [5]. The increase of the receipts of foreign direct investments to Ukraine is connected with the processes of
privatization. Thus, in 2001 it was the privatization of big companies deal with
production and distribution of electric power, in 2003 – chemical enterprises, in
2005 – re-privatization of metallurgic concern «Kryvorizhstal» with the record
amount of foreign direct investments – 4,3 billions of US dollars. In 2006 the considerable volumes of foreign capital came in the form of mergers and acquisitions
– M&A, in particular in banking sector (purchasing of Reiffeisen International by
Austrian financial group, in August 2005, 93,5% of bank Aval shares totaling to
1,028 billions of US dollars; in March 2006, purchasing of 100% of shares of Index Bank by French financial group Credit Agricole etc). The highest annual volume of foreign direct investments involvement in Ukraine was reached in 2007–
about 8 billions of US dollars [5].
Figure 1
Average annual rates of foreign direct investment involvement
in the countries of the world, billion US dollars
12,8
6,4
5,6
4,4
1,1
Ukraine
1,4
СIS*
2000-2005
CEE-7*
2006-2011
Calculated according to the data [5, 15]: calculations of the author.
(*) – mean value concerning each country of the region for the pointed out period.
420
O l e k s a n d r
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Ukraine according to the volumes of foreign direct investments per capita
yields to the countries from CIS, and according to the ratio of the volume of investments and GDP considerably yields to the world indicators and countries of
CEE. Besides it, in the last 10 years in the structure of foreign direct investments
involvement in the countries of origin, some disproportions took place. Thus, the
main donor of foreign capital in Ukraine is Cyprus – 22 %, and its share since
2003 increased. But, in personal opinion of some experts, this is actually the
capital of Ukrainian companies, which returns to Ukraine with the status of foreign direct investments and under protection of corresponding legislation, aimed
at obtaining of benefits and preferences. The majority of investments from Cyprus come to Ukraine [15]. The similar schemes are used by Ukrainian business
in Virgin Islands (3,3 %), Bahama Islands (0,9%), Panama, Belize (0,1 %) and
others [9]. Experts from the company Ernst and Young have researched admitted
that more than a half of foreign direct investments from the Netherlands and
about one third of Austrian foreign direct investments are reinvested by the capital of Ukrainian companies [10].
In Ukraine the considerable deterioration of investment environment took
place during the world crisis. Over the period of 2008–2011 the national credit
rating of Ukraine was downgraded by 9 times by the rating agencies. First of all,
the reason was connected with the significant decline of GDP for 15 % in 2009,
the deficit and the government debt was increased tо 16 %, the rates of internal
and external investing were reduced, the reforms’ implementation was ineffective
[5]. As a consequence, in the rating of economic freedom Ukraine declined from
134 place in 2007 tо 164 place in 2011. The similar decline was in the rating of
Ease of Doing Business – from 118 position tо 145 position [9].
The key problem of the investment environment of Ukraine is organization
of the state regulation of economic activity, taxation system, business administration. Moreover, over the last years the state of affairs only undergoes degradation.
The noted critical evaluation of the investment environment of Ukraine
shows the significant gap between the investment attractiveness of Ukraine and
countries of CEE. Moreover, the average indicator of investment climate profitableness of the CIS countries is a quarter higher than the indicator of Ukraine
(Figure 2). Therefore, it is obvious that Ukraine requires complex reformation of
economy and consideration of economic development priorities. There are certain conditions and significant potential of development for these. Firstly, the
given potential of non-realized possibilities is in the sphere of innovation development where in comparison with the countries – founders of EU or CEE countries there are great opportunities for development and involvement of foreign direct investments. The UNESCO data acknowledged of the above mentioned.
Ukraine according to the nation’s intellect ranks 23 place among the 192 member
states of this organization [13]. According to the rating of innovation potential,
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which is calculated by the experts of the World Economic Forum, Ukraine ranks
63 place among the 139 countries of the world, It stands higher than Russia,
Spain, Portugal, Hungary, Baltic countries [140].
Figure 2
Comparison of evaluations of investment environment attractiveness
in 2011
1,2
4
Economic freedom
1,6
1,2
4,4
Ease of Doing
Business
2,4
1
1,8
Tax profitableness
1,3
Creditworthiness
1,1
2
1,3
1,6
Competitiveness
2,5
1,5
2,7
Effectiveness
of power
5,6
3,8
1,3
Political instability
ІInnovative
profitableness
1,8
1,6
Ukraine
CEE-7
CIS
1,1
2,5
1,1
1,5
Average
2
2,9
Calculated according to the data [8;10;15]: calculation of the author.
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In the times of USSR the half of innovation production, inventions were
Ukrainian. But financial provision of innovation sphere in USSR was at 3 % level
of GDP, at the same time when Ukraine in the modern period makes available
funds for financing only at the level of 0,84% of GDP (innovations in whole),
0,41 % of GDP – for research activity of engineering development. The number
of enterprises, which introduce innovations year after year decreased and
amounted to 12–13% [5].
Nevertheless, there are enough indicators in Ukraine, which induce to the
budgetary and private financing of innovation sphere. Among them there is a
high potential of GDP development, big raw material supplies bus, law level of
own processing, outdated technologies of production etc. A key problem, which
reduces the effectiveness of state programs, concerning innovations development, is the lack of distinct definition of priorities.
The Law of Ukraine «On priorities of innovation activity» (2003) defines
41 priority spheres, which causes the erosion of resources. Instead in Germany
there are five such spheres, in Russia – 8. On the legislative basis, there is no
distinct gradual approach. Over the period of last ten years in Ukraine 20 key directions of regional development, 20 strategies, 80 conceptions and 20 regional
strategies, which permanently changed, were defined [7].
Law of Ukraine «On innovation activity» (2002), which introduce the efficient tax incentives for innovation enterprises both domestic and with foreign
capital, stipulated the following: 1) 50% of profit tax, received by means of purchasing of innovation goods or services stays at the enterprise in order to use it
exclusively for the financing of innovation activity; 2) 50% of value added tax, received from the received by means of purchasing of innovation goods or services
stays at the enterprise in order to use it exclusively for the financing of innovation
activity.
But the given benefits were abolished in 2005. After the abolishment of
special regime the productiveness of technological parks, which were established
during the period of this law operation, was reduced significantly. Export of technological parks products and the number of employed people decreased twofold, tax payments to the budget eight-fold.
The noted policy contradicts the policy of the other countries, where the
priority and privileged regimes for the technological parks and special zones and
priority development of innovations were intensified. Lots of countries introduce
government grants. Israel subsidizes 32 % of the innovation project value, in Singapore, 90 % of technological parks are financed by the state, Taiwan introduced
seven-year term without profit tax, In China companies, which realize the innovation products pay only 10 % of profit tax. In Russia, domestic and foreign companies, which realize innovation projects in «Skolkovo», completely grant the remission of taxation [14].
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In such a way, it is obvious that Ukraine requires distinct well-balanced
program of development of investment-innovation activity. It is expedient to decrease the number of priority directions of innovation activity, but to increase the
volumes of their financing, emphasizing on foreign investors. On our opinion, it is
necessary to renew the legitimacy of the Law of Ukraine «On innovation activity»
and preferential stipulated by this Law. On O. Havrysh opinion, Ukraine is able to
reach the production of science-intensive products of 20 % of GDP in case of
strategic planning of innovation sphere development, studying the experience of
the successful innovation countries [9].
Lots of experts suggest that Ukraine requires serious liberalization and
transformation of tax system. In accordance with the investigation of business
environment by the experts from the World Bank in 2011, Ukraine according to
the profitableness of the fiscal system is the lowest in the world rating. Tax system of Ukraine is one of the most complicated, ponderous systems, overloaded
by the state administration. Even the essential improvement will not make it favorable or preferential for foreign enterprises. Therefore, on our opinion, the
question is about the drastic change of the system of tax administration, considering the majority of rates.
Foreign investors suppose that the biggest disadvantage of investment
environment of Ukraine is legal, juridical, economic unpredictability. They refer
Ukraine to the list of countries with the increased investment risks and point out
the ineffective work of mechanisms of market rights and freedoms provision for
foreign investors, protection of their property rights and interests [11].
Conclusions. In order to promote the revenue of foreign investments,
Ukraine requires deep reformation of economy in the part of improvement of investment climate. To achieve this objective, there are two parallel complexes of
measures. The first deals with the provision of negative factors overcoming – corruption, bureaucratization, legal and judicial self-will, shadowness of economy,
custom and tariff burden, The second complex should provide the positive
changes intensification of protection of private and intellectual property, intensification of market reforms, provision of openness of economy, etc.
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The article was received November 21, 2011.
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Vol. 10 (№ 4). December 2011
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Te r n o p i l
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E co n o m i c
U n i ve r si t y
Microeconomics
Aspasia VLACHVEI
FACTORS INFLUENCING CONSUMERS’
BEHAVIOR ON WINE CONSUMPTION:
A LITERATURE REVIEW
Abstract
In this article data from different countries of the world concerning consuming of wine production is summarized. The main factors influencing consumer’s
behavior of wine consumption in different countries are distinguished.
Key words:
Factors influencing consumers’ behavior, wine consumers, wine brand
name, region of origin, wine quality.
JEL: D12.
© Aspasia Vlachvei, 2011.
Vlachvei Aspasia, Department of International Trade, Technological Education Institute of West Macedonia, Greece.
426
A s p a s i a
V l a c h v e i
Factors Influencing Consumers’ Behavior
On Wine Consumption: a Literature Review
1. Introduction
In 8000 BC, when men and women drunk the fruit of Dionysus they found
themselves Worshipping the God of Wine with festivals which ended in sacrifices
and wild orgiastic events, known as the Bacchus mystic rituals. Nowadays, modern consumers may not need to learn the skill of wine making but simply pick up
a bottle from a shelf. This choice is, however, a complex matter, since there is a
wide variety of wine produced not only in Greece but, with a few exceptions, in all
countries of the world. Consumers evaluate the quality of a wine based on certain criteria, the quality signals, which help them in their external information
search for a certain wine. When a product has a high proportion of experience attributes as with wine (Chaney 2000), then the ability of consumers to assess
quality prior to purchase is severely impaired, and consumers will fall back on extrinsic cues in the assessment of quality (Speed 1998). Researchers have found
the elements most able to influence the choice by consumers are the region of
origin (Orth et al., 2005; Perrouty et al., 2006; Schamel, 2006), the attractiveness
of the front label (Atkin et al., 2007; Barber et al., 2006; Rocchi and Stefani,
2005; Seghieri et al., 2007), grape varieties (Balestrini and Gamble, 2006; Felzensztein et al., 2004; Lockshin and Hall, 2003), the brand (Yue et al., 2006),
peer recommendations (Wansinsk et al., 2006), the alcoholic content of the wine
(Lockshin and Rhodus, 1993), reading about wine at home (Unwin, 1999). However, all these attributes impact differently on consumers according to demographic variables, e. g. age (Barber et al., 2006; Gluckman, 1990; Seghieri et al.,
2007), income levels (Barber et al., 2006; Felzensztein et al., 2004;), involvement
(Lockshin et al., 2001, 2006; Rodriguez Santos et al., 2006), frequency of consumption (Atkin et al.,2007;Martinez-Carrasco Martinez et al., 2006) and country
of origin (Goodman et al 2008).
Firms have to understand the similarities and differences between countries in order to devise efficient brand marketing strategies. However, one of the
major issues is trying to accurately measure similarities and differences between
countries. In this review we’ll summarize the findings from the literature for nineteen countries in order to present the main factors influencing consumers’ behavior on wine consumption by country and to provide to owners, managers.
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2. Factors affecting consumers’ purchasing
behavior on wine by country
Australia
Batt and Dean (2000) found that the origin of the wine was the third most
important variable influencing consumers’ decision to purchase wine in Australia.
Tustin and Lockshin (2001) in Australia confirmed region to have a major impact
on wine purchase. Another study in the Australian domestic market found «wine
region» to rank eighth out of 21 decision-making variables. However, when the
true elements that make up the composite variable «regional brand image» are
included – specifically variety, style, winemaker and cellar door visits – the importance of region of origin in consumers’ purchasing decision is much greater
(Bruwer, 2008).
Johnson and Bastian (2007) recruited 61 wine consumers from Adelaide
area and subject them to three types of tests: 1) an objective wine knowledge
test, 2) a sensory acuity test, and 3) a subjective wine knowledge test. They then
asked them a series of demographic and purchasing behavior questions. According to the results the purchase drivers were wine style, followed by price, for all
respondents. Wine quality was the second most important purchase driver for the
medium and high expertise groups. Recommendations from friends, family and
colleagues ranked high for the low expertise group. In contrast, region of origin,
and reputation of the winemaker ranked high only for the high expertise group.
Unlike the high expertise group, the low-expertise group was easily swayed by
awards or medals, or by advertising, promotions, or specials. Interestingly, high
expertise respondents ranked recommendations from wine writers significantly
higher than the other two segments.
The results of McCutcheon et al (2009) are in line with the previous. Region of origin and the regional composite attribute are very important factors in
the purchasing decision. Another conclusion based on behavioral segmentation
was that red wine drinkers are more heavily influenced by region of origin than
white wine drinkers in their wine choice behavior. Finally, it was confirmed that
high involvement wine consumers were more strongly influenced by wines’ region of origin than low involvement wine consumers. This finding concurs with
earlier studies (e. g. Hollebeek et al., 2007).
Goodman et al (2008) using the Best Worst method prove that the choice
influence attributes in rank order for the Australian retail setting, show that tasting
the wine previously and someone recommending are key – followed by grape variety and origin of the wine (country or region).
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According to more recent results of Bruwer et al (2011) the choice of food
to match wine is the single most important wine buying choice factor across all
the age and gender groups, especially for males. The only significant differences
between males and females were reported for two factors, namely wine writers/critics and wine store staff. From a sensory preference viewpoint, fruit tastes
and aromas are by far the most important especially among females, as are
vegetative characters, wood/oak, and mouth-feel. More males preferred the aged
characters of wine. For males there is a significant difference within the Millennial
and older generations between red and white wine consumption, while in the
case of females it is far less pronounced. On the other hand for Generation-X
and older consumers the advice of restaurant waiters is more important than for
Millennials. Young Millennial females are more influenced than their male counterparts by extrinsic cues such as label information, by third parties such as wine
store staff and wine writers/critics and by their spouse/partners.
Regarding consumers’ behavior on organic wine, Remaud et al (2008) paper explore the importance that is given to the organic attribute by Australian
wine consumers compared to three others: price, region of origin and another
eco-friendly claim. A choice experiment has been used to test the importance
and the utility attached to each level of each attribute. The results indicate that
organic, as an attribute, is valued very little by the «average‟ Australian wine
consumer.
Austria
Goodman et al (2008) conclude that the two top influencers on choice in a
retail setting show the importance of getting the variety right and making sure
people have tasted it. This infers that the Austrian market may be served through
using and labeling the right variety (which may change over time), and therefore
the importance of research into consumer preferences for variety. Varietal is
more important as an influence, as is the matching with food – a possible avenue
for wine marketers to communicate the food matching of wines to local food
choices and styles.
Brazil
When looking at emerging markets like Brazil Goodman et al (2008), prove
that there are some distinct differences, notably in the area of brand influence.
Matching food is much more of an influence in Brazil, and Brazilian cuisine
throws some opportunities for wines, particularly shorter-term return whites.
Grape variety was less important than other markets – again a signal for an opportunity to develop blended wines, to match food and build a brand around. Although «tasted the wine previously» is second most important, it might signal a
willingness to discover something new with a known brand.
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Bulgaria
The results of Nivelin Noev (2002) for Bulgaria reveal that there is significant regional reputation on the market and wines are sold with significant price
discounts compared to branded Svishtov Cabernet Sauvignon wines. With time,
price discounts are rapidly diminishing for white wines and increasing for red
wines, and regional reputations are losing significance, with an increase in the
coefficients. This is positively related with wine industry restructuring and is a major result from the completed privatization in the sector. We show that Bulgarian
wine market is segmented and when estimating the impact of regional reputation
on wine prices, and respectively on consumers' willingness to pay, the differences in the both segments – red wine market and white wine market – should
be taken into account in order more accurately the effect of different factors on
retail wine market prices and consumers' behavior to be captured.
China
Chinese consumers, according to Balestrini and Gample (2006), are more
likely to use extrinsic cues than intrinsic cues to evaluate wine quality. Thus,
COO information is a significantly more important cue than price for Chinese
consumers as a quality cue. However, there appears to be no significant difference in the importance of COO and brand in this regard. An interesting finding is
that Chinese consumers pay much more attention to COO when they purchase
wine for special occasions, where their choice is exposed to the judgment of others. By contrast, when purchasing wine for their own private consumption, COO
assumes a lesser importance.
The analysis of the Chinese market by Goodman et al (2008) shows the
importance of the old fashioned need to build the brand. Overall information on
the back label was only a marginal influence, as was the presence of a
medal/award. Again, grape variety was less important as was attractive front label. The Chinese do not typically drink wine with food, except in Western restaurants, so matching food has little importance. However, brand and origin are
quite important there. The lower overall scores in China may indicate an undeveloped wine market, where buyers do not have much experience or just variation among the consumers surveyed.
Cyprus
Vrontis and Papasolomou (2007) identified a number of factors influencing
consumers’ decision-making process. These factors included the flavour of the
wine, which appears to be the most influential factor (the wine aroma the wine
colour), brand name and the price. Research by Vrontis and Paliwoda, (2008)
conducted also in Cyprus revealed the results that «Cypriot consumers (espe-
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cially women) often use the packaging of a product (bottling and labelling) as an
aid in making their purchase choices».
France
The results of Viot and Ducros (2010) for France show that the brand concept is not clearly perceived by the consumer: there is confusion between the
brand and the A.O.C. Several factors account for this confusion. First, certain
A.O.C. wines are price-positioned very closely to marketed wines (between 1.5
and 2.5 euros). However, the A.O.C. alone does not suffice to sell a wine. Second, certain practices foster confusion between brand and chaˆteau. Many
chaˆteaux sell branded wines. If producers and wine merchants want to convince
consumers to buy branded wines, they have to capitalize on existing brands or to
create new strong brands. Moreover, the cluster analyze reveals the existence of
an interesting class of wine consumers «the discoverers». They are young
«emerging wine learners» coming from the novices group. They declare to be
positively influenced by brands. It is important to differentiate novice consumers
from discoverers because they tend to be sensitive to more complex attributes,
traditionally used by the experts, like origin, vintage and production (Barber et al.,
2008).
According to the results of Goodman et al (2008) «matching food» is the
most important influencer for French consumers. This is also true of the origin of
the wine, which is almost as important. Interestingly, whilst this would suggest a
conservative, unexperiential approach, in fact these two influencers are possibly
guiding «rules» for choice, whilst «having had the wine before» is much less of
an influence than in Australia. French consumers are possibly more confident as
they are less likely to be influenced by others.
As an attempt to extend the research on the influence that label of bottled
wine can have on consumers’ decisions of buying, the study of Lunardo and
Guerinet, (2007) shows some interesting results. Bottles of wine with labels perceived as authentic by young consumers are seen as less risky to buy. New
kinds of labels, without any drawing of castle of vineyard for example, or with
bright colours, are seen as risky. Furthermore, all the dimensions of authenticity
do not affect the consumers’ behavior. As original dimension of authenticity influences performance risk, perceived price and purchase intention, reflect of personality and uniqueness dimensions do not influence all the dependant variables.
For instance, the fact that the label reflects the consumers’ personality does not
influence perceived price, while natural dimension does.
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Germany
Netter and Deters (2011), found that Germans intensely focused on verifiable sources of assurance, which can be regarded as an expression of their
comparatively higher risk sensitiveness. Common to consumers was the connection between the values underlying their purchasing behavior and countryspecific most pronounced perceived risks. Physical risks appeared to be of
higher relevance for Germans while packaging was found to be a decisive factor
in the decision making of organic wine consumers; functioning as a mediator,
packaging has the potential of dispelling skepticism. Mueller and Lockshin (2008)
for Germany found mainly gender and age to be discriminating variables between consumer segments between those with high importance of cognitive cues
(brand and price) compared to visual cues (label style and label colour). Wine involvement and wine consumption or purchase frequency were not found to be
significantly different between consumer segments.
Also according to Goodman et al (2008), whilst previous taste is the most
important, there is little difference between the influence of someone recommending it and the need to match food. The Germans score more highly than
other countries on the influence of other people. There is a gap of difference
down to origin and then again to grape variety, with back label information a
slight influence. «Marketing efforts» such as brand, attractive front labels, promotional displays in-store, shelf information all rate as less important influences.
These results are in line with the results of Szolnoki (2007) who compared the
relative importance of wine packaging elicited with rating and rating-based conjoint analysis for German wine consumers. Using verbal direct measurement,
packaging design was rated as second least important after wine flavour and origin, but surprisingly before brand. For the rating based conjoint analysis he combined four attributes origin/grape variety, label layout, bottle form and bottle color
with either two or three levels in photographic bottle representations. Label style
showed the overall largest effect with an importance of 40 %, followed by origin/grape variety (30%), bottle colour (19 %) and bottle form (12 %). Neither
brand nor prices were included in the conjoint design.
Greece
Tzimitra-Kalogianni,et al. (1999) report that the most preferred attributes
for Greek consumers are wine’s «full (pleasant) taste», «clarity», «appellation of
origin», «aroma» and «attractive label». The same study reveals that Greek consumers believe that wine should be bottled in glass and never in carton boxes,
because glass can be recycled, an indication of consumers’ environmental consciousness.
Fotopoulos et al. (2003) analyze consumer preferences for a series of
«new» wine attributes and reveal in a structured manner, purchasing motives
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that comprise the innovative concept of «new»wines, related to consumers’ cognitive system imposed by their higher values. The overall findings are as follows:
firstly, healthiness, quality, information, attractiveness and good taste are the five
main motivational benefits of wine purchase. Secondly, pleasure is the valueleverage of wine consumption. Thirdly, the distinction between organic buyers
and non-buyers derives from the differences in the evaluation of these motives in
consumers’ cognitive structures and the different motives with which wine’s organic character is associated.
The study of Krystallis and Chrysochou (2010) measures brand performance and loyalty of four different Greek wine varieties. Based on stated preference data, basic brand performance measures are estimated through Juster purchase probabilities of brand choice. To measure loyalty behaviour, the polarization index w (phi) is used as a measure to model both loyalty to the brand name
and specific wine attributes and their levels. The findings point to the conclusion
that each one of the four Greek wine varieties under examination exhibits its own
market structure and loyalty profile, whereas price, quality certification and winemaker’s size seem to function as loyalty stimulators more effectively for white
wines. The fact that variety/region combinations are more important criteria than
brand name constitutes both a reason for and an indication of the large fragmentation of the wine market at the brand level.
Quality certification seems to constitute a very powerful attribute irrespective of wine category (white or red) or variety. Focusing on the price attribute, the
preference for average price tiers across all wine varieties analyzed may indicate
a type of value-cost trade-off resulting in low- and high-price aversion; low prices
may indicate lack of product quality in the eyes of the customers leading to a
high-risk buying decision; and high-price aversion may be the outcome of the
widely held perception among some Greek consumers that wine is/should be a
high value-for-money product. After all, price was found to be one of the most
important self-reported criteria of wine selection, as described above.
Ireland
The research of Geraghty and Torres (2009) for Ireland adopts a lifestyle
segmentation approach by linking lifestyle values, product attributes and buying
and consumption patterns. The primary research is descriptive in design, employing a self-administered questionnaire to collect quantitative data on wine
consumer behaviour. Efforts made to ensure a highly representative sample included choosing a large sample size, administering the questionnaire in a range
of outlets, and gathering information from wine drinkers with wide ranging involvement levels. The research identifies three clusters of wine consumers: casual wine buyer, value seeking wine buyer, and wine traditionalist. Together, the
clusters provide an insight into consumers’ behavior.
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Israel
According to Goodman et al (2008), in a market that is developing more
wine consumers, we see the importance of relying on previous experience, with
previous tasting being the most important influencer. It is three times more important than the second influencer of matching food and four times that of someone’s recommendation, which is roughly equal to brand name, grape variety and
reading about the wine. The Israelis feel strongly about previous experience,
since it has such a high overall score. The origin of the wine was not found so
important in Israel.
Italy
The results from Stolz and Schmid’s (2009) study indicate Italian consumers assess the quality of a wine based on its sensory qualities. Furthermore, Italian consumers are positively influenced in their assessment of the wine quality by
the origin of the wine, especially referring to knowledge regarding the vineyard
and winemaker.
The research of Casini et al (2009) for Italy applied the Best Worst method
to investigate the degree of importance individuals give to 13 attributes related to
choosing wine, and in particular the behavioral differences across geodemographic subgroups of the sample. If respondents already have drunk a wine
or if a wine matches best with the food they are going to eat either at home with
their friends or in restaurant, there is a higher probability that this wine will be
chosen. It is found scant attention toward the alcoholic content of the wine and
promotional activities carried out by both sectors in order to stimulate wine purchases. It has been surprising to note that in the retail sector an impressive front
label is not sufficient to influence the choice of consumers, while in the onpremise setting, the possibility to buy a wine in a ml 375 format is not seen as a
key incentive. The analysis also showed that, while choosing wine in retail stores,
the level of involvement respondents have toward wine, their age and the geographic region they belong to are the factors, which most discriminate consumer
preferences. Differences in terms of income, on the other hand, do not seem to
segment the market strongly. In the on-premise sector respondents demonstrate
a more homogeneous behavior compared to the retail respondents, with differences in the age of interviewees and their degree of involvement having greater
influence than other variables. Such homogeneity is so evident that with respect
to the geographic area and income levels, not even one attribute could discriminate across segments. France and Italy demonstrate the need to understand local markets and position wine’s individual offerings with local cuisine (Goodman
et al, 2008).
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New Zealand
Hollebeek et al (2007) conducted a conjoint study of purchase intention for
wine defined in terms of attributes relating to region of origin, price and price discounts. While the sequence of the relative importance of these attributes was
identical across the involvement-based consumer segments, differences among
consumers who were low and high within the two involvement constructs were
established. A key finding was that information about a wine’s region of origin
was more important in purchase decisions made by consumers high, as opposed
to low in product involvement.
According to the results of Goodman et al (2008) for New Zealand grape
variety is much stronger influence than the evidence of medals/awards and to
lesser extent brand names. Also consumers are not influenced by someone’s
recommendation – a trait common with old Europe.
Similar findings were obtained for purchase involvement with region of origin being more important to high than low involvement consumers. This indicates
opportunities for regional branding activities activities and serves to justify a strategic approach focused on the development of regional brand equity in wine
marketing, since such activities are expected to predominantly attract highly
product-involved and highly purchase involved consumers. Selective targeting of
these segments is generally desirable since these were found to purchase significantly more wine than their low-involved counterparts, both in the present
study and in previous research (e. g. , Quester & Smart, 1996).
Romania
Tokaj Wine Specialities have few competitors and enjoy a rare niche
among natural dessert wines since traditions surrounding their preparation, their
specific microclimate, and unique taste enable one to utilize marketing tools for
branding and market placement. To elaborate the marketing strategy, one needs
market information that adequately shows the current situation and trends .If the
consumer has already attained a certain level of wine sophistication, one observes rational consumer behaviors in terms of price-value-quality ratio (Szakal,
Zoltan, 2009).
Spain
Joel Espejel and Carmina Fandos (2009) analyze the influence of the perceived wine quality across intrinsic and extrinsic attributes on satisfaction, loyalty
and buying intention of Spanish protected designations of origin (PDO) wine consumers. The results obtained in the hypothesis contrast of the model reveal the
existence of a positive influence of the intrinsic perceived quality attributes (color,
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smell and flavor) on consumers’ satisfaction. On the other hand, it is not possible
to find enough evidence to support the influence of extrinsic perceived quality attributes (price, brand and region of origin) on consumers’ satisfaction and loyalty.
A possible explanation of these findings could be the small degree of consumers’
involvement before the wide variety of PDO wines on the market. Quite probably,
this aspect could influence their satisfaction and loyalty towards these kinds of
products. Thus, for the formation of attitudes and positive expectations towards a
PDO wine, consumers need to feel safe and they need to be informed in relation
to all the processes of elaboration and transformation, region of origin and symbolic values included (Nosi and Zanni, 2004). In fact, consumers need to evaluate the intrinsic and extrinsic attributes because it is there where they find all
kinds of information and values on which to base their satisfaction, loyalty and
buying intention.
Martinez-Carrasco et al. (2005) conducted a study in Spain that incorporated questions on four lifestyle variables. They were interest in gastronomy, with
items about liking the taste of wine and drinking it with a good meal; healthy life,
measuring worries about health, figure, and diet; social activity, about business
meals, travel, and time spent with friends; and ethnocentrism, with items about
designation of origin and preferences for local/national products. For the consumption of quality wine, three of the four predictors proved to be significant. Interest in gastronomy and social activity were both positively related to consumption, whereas healthy life was negatively correlated. Ethnocentrism was only significant for predicting consumption of wine with a designation of origin.
Brugarolas Mollá-Bauzá et al. (2005) investigated what consumers are
willing to pay for an organic wine in comparison with a similar conventional wine.
Their findings suggest that consumers who are highly concerned about the environment are willing to pay a premium price. However, for the largest part of their
sample the main factor explaining their willingness to pay more for an organic
wine were their concerns about health and diet. According to authors environmental concern and a general interest in a healthy life style can be identified as
two factors that highly influence the purchasing intention as well as willingness to
pay more for organic wine.
Switzerland
The results from Stolz and Schmid’s (2009) study indicate Swiss consumers assess the quality of a wine based on its sensory qualities. Furthermore,
Swiss consumers are positively influenced in their assessment of the wine quality
by the origin of the wine, especially referring to knowledge regarding the vineyard
and winemaker.
Brunner and Siegrist (2011a) using factor scores, a hierarchical cluster
analysis was run, resulting in six wine consumer segments. These segments
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were further analyzed and described as: the price-conscious wine consumer; the
involved, knowledgeable wine consumer; the image-oriented wine consumer; the
indifferent wine consumer; the basic wine consumer; and the enjoyment-oriented,
social wine consumer.
Brunner and Siegrist (2011b) prove that five determinants significantly influenced both consumption and spending: knowledge, bargain, recreation, age,
and intellectual challenge. Except for knowledge, they were trade-offs. Consumers who pay more attention to bargains drink more wine but pay less for it. Consumers who tend to drink to make they feel comfortable consume more at a
lower price per bottle. Older respondents also consume more and spend less on
wine. Finally, consumers who drink wine for an intellectual challenge consume
less and spend more. This trade-offs pose the real challenge for wine marketers:
to get consumers who drink a lot to buy more expensive wine and to get consumers who drink expensive wines to drink more of them.
Taiwan
Similar to other markets, in Taiwan «tasted the wine previously» and
«someone’s recommendations» are the biggest influencers. Quite distinct from
other markets though, is the third biggest influence of «having read about the
wine», an equal influence with the «origin of the wine» (Goodman et al, 2008),
Turkey
The findings of Gunay and Baker (2011) reveal that demographic profiles
influence wine consumption patterns of consumers. The importance of price,
promotional displays, quality level of the wine, brand name, grape type, grape
region varies among respondents and thus these factors define the target market. These factors clearly vary among different age, gender, marital status, income and education levels. Interest in quality wine, origin of region and grape
type target high education and income-level consumers while reasonable or low
price and promotional displays target young and lower educated consumers.
Females and singles are willing to pay higher prices for quality wine and producers could exploit companies this by marketing light and quality wines to females
while targeting singles with expensive quality wines. According to our findings,
occupation does not appear to have any influence regarding wine consumption
habits despite its association with income levels.
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UK
Having tasted the wine previously is the most influential, more than twice
that of any other attribute, whilst someone’s recommendation is nearly twice as
important as the origin of the wine or the information on the back label, for British
consumers. This in itself is vital research as to what information UK consumers
are looking for on the back label. Brand name has a small influence and is not
much different from reading about the wine, the grape variety, or matching food.
Interesting is the number of attributes that scored «least‟ including attractive labels, promotional displays in-store and grape variety (Goodman et al, 2008).
USA
In a study of Barth and Salazar (2011) in East Coast they prove that less
informed wine drinkers preferred to purchase wine by the glass, while informed
drinkers purchased wine by the bottle. Informed wine drinkers have a base of
knowledge that allows them to know how certain wine varietals pair with meals.
Less informed wine drinkers are still compiling their wine identities and often
choose wines differently. They may choose a wine solely from a certain price
point, or they may try a wine they have never heard of before to increase their
level of knowledge. Informed wine drinkers are rounding out the wine and food
experience with a wine chosen from a prior experience, one that would best
compliment the meal. Less informed wine drinkers are attempting to expand their
base of knowledge in order to be able to make informed wine decisions at a later
point in time. Lastly, less informed and informed wine drinkers showed a significant preference toward the criteria they used to purchase wines. Less informed
wine drinkers most often choose a specific wine based on price. Informed wine
drinkers chose a specific wine based on food pairing, grape type, or region of
origin. In the USA, matching food is more of an influence, along with attractive
front label, whilst medals/awards are less so (Goodman et al, 2008).
According to the results of Henley et al (2011) for the purchasing behavior
of millennial, when the producer provided specific fruit characteristics, the informant perceived they tasted those fruits much more than without this information
in the blind tasting. This demonstrates the importance of the information on the
labels and how it can impact the taste perceptions of consumers. The informants
in this study indicated several factors such as closure, font style, eye-catching
front label, color of the bottle, food pairings, and wine producer information as affecting their purchase intentions.
In another study of Sherman and Tuten (2011), the results suggest that the
evolution of wine labels has not changed the consumer’s perception of what a
wine label ought to look like. Though novelty and contemporary names scored
well, novelty designs with contemporary and novelty names were less desirable.
Further, novelty wines were perceived as cheap and of low quality. They are
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considered perhaps more appropriate for novelty occasions rather than occasions studied in this research. As anticipated by the consumer wine buying decision model, the label design does serve as an extrinsic cue in the development of
perceptions about a wine, and these perceptions affect the intent to purchase.
3. Conclusions
The research provides the owners, operators and managers of wineries
with a better understanding of the main attributes associated with wine purchasing in nineteen countries, in a way to contribute to the development of their marketing strategies and brands.
According to the literature, French and Swiss consumers are positively influenced in their assessment of the wine quality by the origin of the wine, especially referring to knowledge regarding the vineyard and winemaker. French are
also more influenced by food matching – and possibly this reflects the reliance,
or use, of the appellation system as a quality and style guide. The influence of
someone recommending a wine is much more pronounced in Germany, Taiwan
and the USA. Whilst the grape variety shows a significant influence in the UK and
China. The origin of the wine is less important for consumers of Israel, but important in case of Germany and China. Brand name has a small influence to the
purchasing behaviors of consumers in Germany and Austria, where marketers
will have to work across a much broader approach than «branding».
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o f
Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
Microeconomics
Nataliia ZARUDNA
MODERN REQUIREMENTS
FOR ACCOUNTING MANAGEMENT
FOR PROVISION PROCESS
Abstract
The following article deals with the issue of accounting management for
provision process and its main requirements, in compliance with high technologies. The background, stages and tasks are determined, to be met within the
process of accounting management. The model of organization of the provision
process accounting is constructed based on the system-wise approach.
Key words:
Accounting management, provision process, system-wise approach,
document flow, electronic document management system.
JEL: M41.
© Nataliia Zarudna, 2011.
Zarudna Nataliia, Ternopil National Economic University, Ukraine.
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Problem statement: At any enterprise the issues of accounting procedures
are under the jurisdiction of its owner (owners) or an authorized body (office holder)
according to the legislation and constituent documents, therewith an accounting
management of a separate segment consists in a targeted harmonization and improvement of the mechanism, structure and procedure of accounting. In addition to
the series of publications regarding an improvement of accounting management of
provision process, further research of certain areas is needed to improve and completely adopt the accounting to the current economic environment.
The correct task solution of operational and qualitative drawing of an electronic document’s execution control, their elaborated preservation, search and
usage take not the last place in ensuring the enterprises’ management effectiveness. An electronic document flow is an exclusive electronic document-centered
mechanism implementing the paperless records management. It is going to be
considered in some detail in the present article.
Analysis of the latest researches and publications: A great deal of scientists conducted research in the accounting management, but just a few of them
covered the detached issue of accounting processes management, carried in
certain enterprises, including the provision process. O. Bondarenko, I. Farion,
I. Perevozova, O. Kovalenko, covered just some facets of the provision process
in detached sections, treating the stock accounting management and trade creditors’ issues.
Setting objects of the article: The present article is aimed to carry the
study of the issue mentioned and to elaborate the model of the accounting management of provision process, based on the system-wise approach in modern
conditions meeting the requirements set before managers by changes in architecture of financial and economic relations between enterprises, technical progress, etc. Besides, the background and stages of the accounting management
of provision process should be specified.
Content statement: A specified regulation of accounting records maintenance in departments and authorities, a subjection of an accounting system to
fiscal purposes (i.e. revenue authorities) restrict the scientific researches and
limit the development of an accounting process, capable to provide information
requested to make day-to-day and strategic management. According to M. Pushkar, a strict accounting regulation is a manifestation of conformity and consequence of former planned economics [1, p. 144].
On the other side, however, business entities’ independence enlargement stipulated the company’s rights and capacities extension. In the meantime, the risk regarding the final results of their activity and an administrative machine responsibility for consequences of enterprises’ economic activity increased. That is why an option for any
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Modern Requirements for Accounting
Management for Provision Process
aspect of accounting management of material values should be made in a balanced
manner, with due consideration to advantages and disadvantages of each option; at
that, a high responsibility of every particular official for decision making is needed.
At the present stage of enterprises’ economic development of relations between them in the provision area, the accounting management should meet not
the standard and common operativeness, analyticity and accuracy, but the principle of complete practicability. According to M. Pushkar, an economic effect, obtained by information usage, serves as a criterion of expediency of information
gaining. Up to the present day, an accounting system delivered services to the
authorities past events, looking forward to a profit and ability to predict future on
the basis of this information. It was possible, however, to get the glimpse of the
future, based on these statistics, only extrapolating the past [1].
To make a strategic management of an enterprise in general and of its certain processes in particular, the basically new data base is needed consisting of
terms of trend indexes in internal and external environment of an enterprise. To
acquire such information on the enterprise’s activity in the area of production assurance of economic resources, the management of provision process accounting should be rationally organized. To effect it, an availability of following preconditions is of the utmost importance:
•
serious in-depth study of the production structure, technology and
management;
•
implementation of the accounting relations between separate enterprise structural subdivisions and account department (i.e. purchasing
department, stock house, transport department, etc.);
•
assessment of the volume of accounting work;
•
equitable distribution of accounting work among accountants and employees in structural subdivisions;
•
regular monitoring of the current developments in instructional and
statutory materials and statutory materials regarding record keeping;
•
antecedent highlight recording of provision process accounting in the
Accounting Policy Statement.
Proceeding from the implications indicated, it is reasonable to examine the
accounting management of incomings’ provision process in brewing enterprises
within the terms of following aspects:
•
organization for financial, management and tax accounting of incomings and settlements with creditors;
•
organization for accountant work management, concerning the incomings accounting (accountants, supply office employees, storekeepers,
accountable people, etc.);
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•
permanent documentation issue on material values’ availability and
settlements with creditors;
•
management of material values’ accounting at the place of their storage and use (stock houses, storerooms, segments, etc.) and settlements with creditors;
•
correct valuation of material values;
•
accounting management for ordering costs;
•
management for synthetic and analytic values’ incoming accounting in
the account department (ledger, sub-ledger and tertiary account determination, account registers’ assessment, etc.).
The following stages forming the model building blocks are illustrative to
organize an accounting management for provision process, based on the system-wise approach (figure 1).
As is evident from the model developed, the accounting management system includes three stages: management for ledger accounting, current accounting and record balance management, each of which, when completed, provides
certain information - source, current and net information respectively. Only with
the electronic document management system implemented, the top management
could have the relevant information just in time, promptly and in full.
As it was also noted, one of the questions of utmost importance regarding
accounting management for provision process is organization for managerial accountants’ work, which includes, beside accountants, materially responsible people and provision department employees, Assets Logistics employees, and department managers, effecting the values’ accounting. In the very early stage of
the management for values’ accounting, the chief accountant needs to make out,
adjust and approve with authorities the lists of people, accessory to the values’
accounting process. These lists are to be renewed yearly, before the assertion of
the Decree «On the enterprises’ fiscal policy», and during the year when needed
(when entering people in the list or excluding from a list). To make the work of
these employees effective, the duty regulations and the schedule of document
flow should be elaborated, pointing the responsible people across all the stages
of movement of the documents filled in [5].
As for incomings’ accounting management, the model of stock accounting
should be primarily specified: whether it is perpetual or periodic. While organizing
stock accounting according the periodic system, an accounting period is needed to
be determined, i.e. frequency of physical inventory taking in order to determine an
ending cash balance. In this context, the accountant’s obligations are to assure the
observance of incomings’ uniform methodological assets, management for incomings’ booking and settlements with creditors, to guarantee the state at stock account
checking-up, and to take part in drawing up of documents on deficiency, inadequacy,
and indemnification for inadequacy, perishability of material values of the company.
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Figure 1
Model of accounting management for provision process based
on system-wise approach
І stage
ІІ stage
ІІІ stage
Logging in
the s ys tem
Process w ithin the sys tem:
Logging out:
Current accounting management
– carrying out operations on
registration of the values in the
accounting records (according the
program of accounts, authorized
at the enterprise); taxation;
bucketing in corresponding
account registers, which are
account books, logs, tickets,
sheets, etc; data casting,
verification and processing to
collect next operating rates of an
enterprise
Record balance
management –
data
summarizing
(management of
current data via
fabrication of
various financial,
statistical
accounting,
management
accounting for
outside- and
inside-customers
Current information
Net information
Ledger
accounting
management
– primary
observation,
perception,
valuation
based on
quantities’ or
cost
accounting,
provision
process
recording on a
certain driver,
which is a
document
Source
information
Cash order,
consignment
note,
supplier’s
account …
Sheet of material values inflow,
inventory turnover sheet, ordering
costs sheet, comparative inventory
sheet …
Turnover balance
sheet of ledger
accounts, and
subaccounts,
ledger # 5 (5-А),
general ledger …
Electronic document management system of electronic
circulation of documents
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On the other hand, it should be kept in mind that an accounting management in stocks makes provision for completing the following tasks: assured effecting of the «acceptance-storage-distribution» process; operational control of
stock condition (i. e. all stocks’ real-time inspection: what is in stock, from where,
when, and what is the price, what is amount of values and where they are laded;
this information should be provided to employees in other departments); financial
analysis of material inventory (backlog turnover determinants and balances, if rationed, are usually put under control).
All the activities as for inventories flow in the stock are controlled by the
manager (storekeeper), which is usually accountable for assets. Whereas he obtains the enclosures (shipping documents, sales-invoices, etc.) along with inventories, he should book their influx in the log book and in the database program of
the storage electronic system. During the acceptance process actual inventories’
arguments reconciliation is effected, which comes with enclosures. It permits to
actualize information about quantitative and qualitative representation of delivery
lot through its identification. The identification can be made in terms of textnumeric information on labels, or barcode read out with portable readers or in
other ways. Later, the due attention should be given to the fitting location of material values in the stock, for it is an indispensable condition of management of
stock inward section. Granting the wide range of goods, kept in stocks, the right
location could permit to create the adequate conditions and conservation regime,
to cut down spending, increase the floor space capacity, allow to search promptly
values’ requested, to keep accurate accounting records of their availability, receipt, expenditure, to ensure their quality protection, etc. To make a rational storage, the allocation schemes, economically and technologically justified, should
be developed. In allocation schemes, the permanent storage spaces are usually
kept for material values of certain groups, subgroups, and item names. The item
name code (reference, item ordinal, symbol, etc.) is assigned to each storage
space with usage of different coding devices. They are marked by bright paint on
the shelve stands, sections or on the floor. Section coding can be alpha-numeric
or numeric, each symbol of which contains certain information. Codes for storage
spaces are the required elements of the automated retrieval system, which are
based on the corresponding databases. In this case they are used when supplies
are arriving and are included into material control sheet (route card).
One of the basic elements needed to ensure an efficiency of managerial
scheme of document provision, or electronic document management system.
Modern technology permits to manage paperless flow of documents, but, as a
matter of practice, electronic documents duplicate only the papers. As for management for inventories document turnover, the major task is to optimize the
transmit channels and channels of communication of executing accounting offices. These channels include procedures from registering each medium (i. e.
document) till generalizing characteristics of information flow (accounting reports). The point is that, while effecting accounting, documents are often surrendered from one operation to another not distinctly, but in blocks. That’s why car-
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rying out the rational media management should meet such requirements: minimum lag time between accomplishment of transaction and getting the data requested for enterprise’s managing body; use of advanced methods and means of
collection, passage and processing of certain accounting information; advanced
planning and further administration; observance of date of performance.
The most common and widely applied method is a graph method of media
turnover management. Nevertheless, the descriptive (textual) method can be
also used in some cases. It is also appropriate to use table-driven graphics. In
tabulated graphics only the capital ways of document circulation are planned,
from operating executives to accounting department and remitting to the archives. Tabulated graphics are generally drawn in the economy field, according
the topological feature (accounting of stocks, law value items, goods, etc.) and by
subjects (supplies’ inflow and issue).
The schedule of document management is drawn diagrammatically or in
terms of enumeration of creation, audit and processing activity, executed by each
enterprise subdivision, and by executers, specifying their relationship and terms
of work execution. Employees draw and exhibit source documents, which are of
their field, according the schedule of document circulation. To perform this, each
executor is given an extract from the schedule. Documents included into everyone’s duty, terms of their exhibition, and enterprise subdivisions, accepting the
documents are listed there [4].
Monthly, accountable employees draw up a report on material values’ flow,
based on source documents, in duplicate and forward it to the accounting office
along with profit and expenses documents. After a corresponding examination
the duplicate is given back to an accountable person. Data on stock receipt and
consumption, as well as data on the remainder of stock are to be basically written
in numerical terms only. An accounting department carries out taxation (evaluation) and summary within the terms of value. The general accountant performs
control of document circulation according to the schedule. The general accountant’s requirements as for documents’ exhibition to the accounting office or to the
computing devices are essential for all departments and segments of the enterprise.
Thus, the schedule of document management at the enterprise is due to
determine the optimum quantity of departments and executors every accounting
provision process source document passes through, to define its minimum sojourn in a department (stock, purchasing department, Assets Logistics, planning
section, accounting department, etc.), to encourage the improvement of accounting work, intensification of statutory accounting controlling function, to raise a
level of its mechanization.
In view of general mechanization of all processes at the enterprises, the
issue of document circulation is of the utmost interest, which means sequence of
processes of creation, handling, departure, lodgment, receipt, saving, usage and
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destruction of electronic records, effected along with the usage of integrity check
and confirmation of the fact of document receipt, if needed [2].
Electronic document management systems ensure the process of creation,
access management and distribution of large volume of documents in computer
networks, as well as document flow control. These documents are often kept in
special holds and file systems. Such systems support different file types: text
documents, image data, spreadsheet, digital audio, video data and Web documents. An electronic system’s implementation has for main purpose creation of
an effective management shell and successful operation of business.
General capacities of electronic systems include creation of documents,
access control, data conversion and data security software. Therefore electronic
document management systems have a number of advantages:
•
Implementation of the electronic document management system permits to enhance an enterprise efficiency by means of rational organization of document management;
•
Available opportunities for teamwork on documents (which is impossible in case of paper documentation) and computerizing business processes, related on information interchange between executives;
•
Great enhancement of document search and digesting (on different
parameters);
•
Decrease of risk of information leakage and data security software due
to impossibility of the work of unauthorized workstation in the electronic system, but certain responsibilities are assigned to every user as
to information access;
•
Increase of preservation of documents and their saving convenience,
for they are hosted;
•
Improvement of document creation control, resulting in increase of
transparency of enterprise activity and its manageability, capacity to
come to balanced and operative decisions, based on current information.
Electronic document management system implication would permit, while
effecting the provision process management, to profit from the integrated document base and general electronic base of correspondence or contacts, to make
the computerized testing of agreements (and accounts), to carry out orders execution, to carry on work with counterparts and manage the counteragents’ documentation, to maintain order in documents and give safe access for accounting
people, for a warehouser, storekeepers, etc., to find all information requested as
easily and quickly as possible.
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For today, there is a great variety of software products, ensuring the electronic document management system at the market, and they can be divided into
two groups: «constructor software» and «packaged software». The packaged solution connotes the standard version, matching to the main part of organizations.
It can already meet the customer’s requirements. As for the constructor, it consists of different modules and is set in a greater degree to the company’s demands, which permits to take account of specific customer’s requirements more
completely. Despite certain advantages of the constructor it should be noted that
setting up and tuning such a system is complicated enough, as, almost always, it
requires involvement of experts from Software Company. In some cases even
the partners of this company are not capable to set it up, satisfying all the requirements of the customer. Besides, the project of this system implementation
will be much more expensive in comparison with generic solution. For the enterprises with traditional record management and flow of documents the packaged
solution is more suitable, as this solution is tested by many customers, it takes
account of customer’s wishes and corrections. It is always completed with detailed documentation and common mistakes’ list. It also costs less [6].
Nevertheless, the development and usage of electronic document management system has got certain deterrent conditions. The typical situation occurs
when two organizations (often located in different places) exchange electronic
letters in the process of contract preparation and agreement. In a number of instances after an agreement is made at the electronic level, parties start working
on the common project, while contract signed by one party is sent by courier. The
implementation of paperless document circulation is also restricted by the necessity of putting in additional security services. Besides, electronic document management requires the solution of a number of legal issues. The contractorscontent providers can participate in the electronic surrender of documents. Provider’s part in the electronic document management system requires solution for
issues of his rights and obligations, responsibility for failure in duties, etc. It is
rather important to determine the level requested of the system reliability. Application of cryptography funds requests obtaining special permission. Consequently, a complete excluding of paper documents from document circulation will
not occur soon: a set of points should be settled to make it possible, related on
admitting the legal validity of electronic document, producing the mechanism of
electronic signature, which could expressively solve the problem of document’s
identification and authentication, and ensuring the availability of special ITsecurity services and modern electronic communication methods.
Summary: Summarizing all above-mentioned it may be concluded that the
issue of the accounting management for provision process at the enterprises is of
exceptional importance and it requests some great attention. The managers, who
have at their command the strictly organized accounting system and the electronic document management system, have an opportunity to get information requested on the provision process and to make corresponding decisions as for
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further manufacturing process and sales process, etc. Taking into consideration
the due accounting process in Ukraine, it is required to put more emphasis on the
management for the cost accounting provision process. The developed model of
accounting management for provision process endorses the need to bring in the
electronic document management system into wide use. It can reduce the time of
information flow from source document to net information (managerial decision
adoption), and therefore, favors dynamic response to the developments in the
provision process.
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6. www.uchi-it.ru/10/1/5.html.
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JOUR NAL
Vol. 10 (№ 4). December 2011
o f
Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
Microeconomics
Volodymyr MAZUR,
Nataliia MAZUR
ENTERPRISE COMPETITIVENESS:
EXPERIENCE OF THE DISTILLARY INDUSTRY
Abstract
The experience concerning provision of the enterprise competitiveness in
the distillery industry is considered.
Key words:
Competitive environment, mechanism, economic situation, competitiveness, economic growth, leadership, human capital, international competition.
JEL: D40, L66.
© Volodymyr Mazur, Nataliia Mazur, 2011.
Mazur Volodymyr, Candidate of Economic Sciences, Assistant Professor, Ternopil National Economic
Mazur Nataliia, Ternopil National Economic University, Ukraine.
J O U R N A L
O F E U R O P E A N
455
E C O N O M Y
December 2011
Distillery industry in Ukraine forms the export potential of the country. It includes 80 distilling plants with the annual capacity 65,9 million of dal of ethyl alcohol. The own need of the country is evaluated at 20 million of dal. The program
«Ethanol» approved the list of 22 alcohol enterprises, where the production of
high antiknock oxygen-containing additive will be organized and 36 enterprises
for the production of technological ethyl alcohol. Realization of the Program will
help to decrease the foreign currency expenditures, and by means of import reduction, create the backgrounds for the considerable expansion of export potential. We take interest in Maryliv distilling plant, which is situated in village Nahirianka, Chortkiv district, Ternopil region.
Maryliv distilling plant – highly developed enterprise, which in despite of
tangled situation in Ukraine, continues its development towards the increasing of
output and products quality. The main line of activities of the enterprise is production and realization of: ethyl alcohol rectified from food raw material; denaturated
ethyl alcohol, technological ethyl alcohol and products which use denaturated
ethyl alcohol (technological ethyl alcohol); ethyl alcohol rectified and denaturated
for perfume products; bioethanol; crude alcohol; crude alcohol; biogas; carbon
dioxide; vodka, distilled beverages; distillery stillage; food products as well as
other products and service rendering.
At the beginning of 2002, the enterprise began to develop the system of
quality and in October of the same year, this system was put into effect. The result of the fruitful work of collective of the plant is collecting of certificate of correspondence of the system of management quality to the international standards
requirements ISO 9001-2000 in July 2003. It should be admitted that the plant is
the first enterprise of the distillery industry of Ukraine, which has collected international certificate.
In June 2010, the enterprise successfully completed certification of the
system of management quality, meeting the requirements of ISO 9001-2008 and
obtained an international certificate in German institution of certification DQS
(certificate №450951 QM08), likewise confirmed the effect of the certificate in the
national system of certification УкрСЕПРО meeting the requirements ДСТУ ISO
9001-2009 (certificate №UA2.034-03023-08).
The component of the system of enterprise management is meeting in the
director’s office, works manager’s office, and «Days of quality», which take place
monthly and coordinate the work, support and increase the products’ quality. All
line managers and experts participate in it.
One of the basic principles of management, adopted at the enterprise, is
entrusting with ample powers to the managers of all levels, especially managers
of the second level. A great attention is paid to the development of horizontal
V o l o d y m y r
456
M a z u r ,
N a t a l i i a
M a z u r
Enterprise Competitiveness:
Experience of the Distillary Industry
connections. Thanks to the model of interconnection among all these processes,
the key problems can be defined likewise the ways of their solution.
Internal auditors help control and increase the effectiveness of the system
of quality management. In their work, they use internal and external documentation of the enterprise.
Taking into consideration the objectives and the strategy of the enterprise
development, politics in the field of quality, the network of the main and additional
processes, which guarantee the effectiveness of production functioning, is defined. Nowadays, at the enterprise, to stabilize the processes and set of
statistical data, the analytical program complex «Information system of distillery
plant’ is applied. Technologist conducts a set of statistical data concerning characteristics and parameters of technological processes. Information is put into the
computer data base, where they are generalized by means of specialized program: the diagrams, figures, tables are constructed, where the tendencies and
deviations of established regimes are depicted. In accordance with the results
and analysis of the data, technologist corrects and changes the technological order, develops and changes technological and work instructions.
Consumer’s satisfaction is the priority guideline of plant activity. The enterprise always meets the requirements of consumers’ wishes. To define the level of
satisfaction of customers and trending, the estimation of work with consumers is
conducted. The highest indicators of clients’ satisfaction are stable long-term cooperation, increase of the number of clients.
Results of the enterprise activity completely depend on qualitative and
quantitative composition of collective, on contribution of everyone into the common cause. These requirements define the personnel policy of the plant.
Nowadays, there are 78 highly trained employees at the enterprise. Strategy of the collective keeps the eye on the big picture; considerable costs are invested in modernization and automation of production. Enterprise’s attention is
paid to the improvement of the products’ quality.
Тable 1
Structure of the number of employees of the plant
Categories
of personnel
Engineering
employee
Employee
Total
men
January 1, 2009
women
total
men
January 1, 2010
women
total
16
28
44
19
30
49
97
113
33
61
130
174
97
116
32
62
129
178
J O U R N A L
O F E U R O P E A N
457
E C O N O M Y
December 2011
Plant's management team permanently works on internal and external outlet market development. Perspective of the plant, its profitableness depends on
the volumes of the alcohol products realization. Because of a great number of
distilling plants in Ukraine, the competition is too severe; therefore, the plant's
management team pays a great attention to the satisfaction of consumers’ demands, guaranteeing the high quality of products.
The main indicators of production of alcohol at «Maryliv distilling plant» for
the period of 2002–2010.
Figure 1
The main indicators of production of alcohol at «Maryliv distilling plant»
for the period of 2002–2010
3000
2500
1827,8
2000
2625,2
1808,2
2092,4
1500
1000
923,8
1007,2
1069
2002
2003
2004
1760
1440,2
500
0
2005
2006
2007
2008
2009
2010
Обсяг виробництва
Output
of productsпродукції
Taking into consideration the Figure 1 we can see that alcohol production
was increased year after year. From 2002–2004 and 2006–2008 the volumes of
alcohol production slowly increased and from 2004–2006 and 2008–2010, these
indicators sharply increased.
«Maryliv distilling plant» has direct access to foreign markets through the
department of external economic relations. There are own foreign economic services, thanks to which the share of export increases, products with the high level
of competitiveness are produced. The planning and forecasting of foreign economic activity is conducted at the enterprise, likewise analysis of the effective-
V o l o d y m y r
458
M a z u r ,
N a t a l i i a
M a z u r
Enterprise Competitiveness:
Experience of the Distillary Industry
ness of the export operations, control over the plan implementation, currency
control.
Sales revenue at the enterprise in 2002–2010 is depicted in Figure 2.
Figure 2
Sales revenue at the enterprise in 2002–2010
3000
1993,8
2500
1901,9
1459,3
2000
1008,3
1500
1000
1638,6
1535
478,2
478,8
414,5
466,3
642
678,9
417
500
393,1
368,5
276,9
33,2
176,1
0
2002
2003
2004
2005
2006
Export,
thousand
Експорт
тис.дол.
of dollars
2007
2008
2009
2010
Ukraine,
Українаthousand
тис.дол
of dollars
Enterprise cooperates with such suppliers as Private Enterprise
«Lohinova», Communal Enterprise «Zolote zerno», Private Enterprise «Agroeksim», «Sens-Agro», ОАО «Dubrovytske HPP», limited liability corporation «Agrotomenergo», local agricultural enterprises (Zalishchyky, Chortkiv districts).
Market of the enterprise fills the remarkable place in the economy of
Ukraine. Products of the distilling plant meet the requirements of consumers. The
circle of customers includes «Vynprom Peshchera» Bulgaria, АТVТ «Baku –
Sharab 1» Azerbaijan, ООО «Ushba» Azerbaijan, «Soiuz-Viktan» LTD Simferopol. Company exports products into such countries as Azerbaijan, Hungary,
Moldova, and imported from Great Britain.
Systematically, the activity of enterprise can be presented by the results of
SWOT-analysis (Table 2).
J O U R N A L
O F E U R O P E A N
459
E C O N O M Y
December 2011
Table 2
SWOT-analysis «Maryliv distilling plant»
Strong points
Wide experience of work
Positive image in Ukraine
Intensified control over the products quality
• Obtained certificates of correspondence of the system of quality
management ISO 9001-2008
• Application of the analytical program complex «Information system
of distilling plant»
• Pick out the winner of the tender
for purchase 1,2 t. Antiseptics
Possibilities
• Restructure the system of development of new types of products.
• Develop a strategy of personnel
management
• Develop internal and external markets
• Development and introduction of
progressive technology and equipment
•
•
•
•
•
•
•
•
•
•
Weak points
There is no distinct system of price
determination
Imperfect system of personnel
management
Absence of promotional packs of
services for the major customers
Insufficient organization of marketing activity
Threats
Adverse change of foreign
exchange rates
Adverse changes of legislation
Improvement of competition sideways Ukrainian and foreign competitors
460
JOUR NAL
Vol. 10 (№ 4). December 2011
o f
Te r n o p i l
N a t i o n a l
E co n o m i c
U n i ve r si t y
«JOURNAL OF EUROPEAN ECONOMY»
IN 2011
Vol. 10
Macroeconomics
Іryna BILETSKA
BUSINESS TOURISM IN THE CONTEXT
OF INTERNATIONAL TOURISM DEVELOPMENT
№2
p. 182
Oleksandr KRUTYLKO
MAIN TRENDS OF IMPROVEMENT OF INVESTMENT
ATTRACTIVENESS OF UKRAINE’S ECONOMY
№4
p. 415
Halyna ZAIACHKOVSKA
MEANS OF MARKETING COMMUNICATIONS
FOR MAKING THE IMAGE OF UKRAINE IN THE WORLD
TOURIST MARKET
№2
p. 175
Lyubov ZATSNA
THE CONSUMING TENDENCIES OF QUALITATIVE DAIRY
PRODUCTS ON UKRAINIAN AND FOREIGN MARKETS
№1
p. 70
Olena HARASHCHUK
THEORETICAL AND METHODOLOGICAL APPROACHES
TO THE FORMATION AND USAGE OF INTELLECTUAL
POTENTIAL OF ENTERPRISES
№1
p. 49
Iryna HOLIASH
FORMATION OF AUDIT DEVELOPMENT PARADIGMS
№3
p. 339
Microeconomics
J O U R N A L
O F E U R O P E A N
461
E C O N O M Y
December 2011
Oksana HUHUL
OPTIMIZATION OF THE PROCESS OF MANAGEMENT
OF PERSONNEL DEVELOPMENT AT THE ALCOHOL
ENTERPRISES
№1
p. 60
George M. KORRES, George POLYCHRONOPOULOS
A NEW APPROACH TOWARDS THE MEASUREMENT
OF INNOVATION AND TECHNOLOGICAL ACTIVITIES
№3
p. 306
Volodymyr MAZUR, Nataliia MAZUR
ENTERPRISE COMPETITIVENESS:
EXPERIENCE OF THE DISTILLARY INDUSTRY
№4
p. 454
Nadiya STETSIUK
MODERN TRENDS IN THE ENTERPRISE’S HUMAN
RESOURCES MANAGEMENT
№2
p. 192
Aspasia VLACHVEI
FACTORS INFLUENCING CONSUMERS’ BEHAVIOR
ON WINE CONSUMPTION: A LITERATURE REVIEW
№4
p. 425
Nataliia ZARUDNA
MODERN REQUIREMENTS FOR ACCOUNTING
MANAGEMENT FOR PROVISION PROCESS
№4
p. 444
Olha ZYHRII
ORGANIZATIONAL BASICS OF THE AGRARIAN
MARKETING DEVELOPMENT APPLIANG
THE INTERNATIONAL PRACTICE
№2
p. 200
Financial and Banking Services Market
Mykola HAPONIUK
CO-INVESTING INSTITUTES IN THE SYSTEM
OF SAVING ACTIVITY FACTORS OF UKRAINIAN PEOPLE
№1
p. 39
№2
p. 210
Market of Currency-Financial Services
Dimitrios SERENIS, Paul SERENIS
EXCHANGE RATE VOLATILITY AND SECTORAL EXPORTS:
EMPIRICAL EVIDENCE FROM TWELVE E.U. MEMBER
COUNTRIES (1973–2004)
462
«Journal of European Economy»
in 2011
REGIONAL ECONOMIC POLICY OF AZERBAIJAN
AND NAKHCHIVAN
№4
p. 383
Viktor HERASYMENKO, Svitlana HALASIUK
LICENSING OF THE TOURIST ACTIVITY IN UKRAINE
WITHIN THE CONTEXT OF THE INTERNATIONAL
PRACTICE
№4
p. 402
Antje KOENIG, Aliaksandr MARTYNAU
THE GLOBAL FINANCIAL CRISIS:
A PSYCHOLOGICAL DIMENSION
№2
p. 155
Nataliia KRAVCHUK
GEOPOLITIC IMPERATIVES FOR GLOBAL DEVELOPMENT
ASYMMETRIES
№4
p. 353
Halyna MARKOVSKA
REGULATORY CONSIDERATIONS OF MIGRATION FLOWS
WITHIN THE FRAMEWORK OF EU-15 AND COMMON
MIGRATION POLICY OF EUROPEAN UNION
№4
p. 391
Tetiana MELNYK
IMPORT REGULATIONS UNDER CONDITIONS
OF ECONOMIC CRISIS
№3
p. 257
Sergii PIDGAIETS
EUROPEAN EXPERIENCES OF IMPLEMENTATION
OF PUBLIC-PRIVATE PARTNERSHIP SCHEMES
№3
p. 292
John RIGAS, Giorgos THEODOSIOU,
Nikolas RIGAS, George BLANAS
THE VALIDITY OF THE OKUN’S LAW: AN EMPIRICAL
INVESTIGATION FOR THE GREEK ECONOMY
№1
p. 16
Maria URBANIEC
ENVIRONMENTALLY-ORIENTED COOPERATION
AS AN INSTRUMENT OF SUSTAINABLE DEVELOPMENT
№3
p. 284
J O U R N A L
O F E U R O P E A N
463
E C O N O M Y
December 2011
Anatolii VDOVICHEN
GLOBAL COMPETITIVENESS INDEXES
AND DEVELOPMENT DISPROPORTION
№3
p. 273
Bohdan ANDRUSHKIV, Yuriy VOVK, Olha POHAJDAK
CRISIS OF RELATIONSHIP IN GENERAL THEORY OF CRISIS
№2
p. 127
Naegul’ DAVLETBAEVA, Yuriy OSIK
THE HISTORY OF ECONOMICS, ECONOMIC
ETHNOGRAPHY AND SOCIAL-ECONOMIC DEVELOPMENT:
IN SEARCH OF CORRELATION
№1
p. 87
Viktoriia DERHACHOVA, Oleksandr ZHUROVSKYI
PROCESES OF ECONOMIC GLOBALIZATION
IN INTERNATIONAL COMPARISONS
№2
p. 138
Viktor KOZIUK
POST-CRISIS GLOBAL MONETARY INSTABILITY
№3
p. 235
Bohdan LITOVCHENKO
SYNERGY OF THEORIES OF INTERNATIONAL
AND STRATEGIC MANAGEMENT IN CONDITIONS
OF GLOBALIZATION
№1
p. 106
Katherina NALYVAICHENKO
ESSENCE OF ECONOMIC INNOVATIONS IN UKRAINE
AS A COMPONENT OF GLOBALIZED PROCESSES
OF WORLD ECONOMIC SPACE
№1
p. 97
№1
p. 3
Economic Theory
European Integration
Tetyana MISYAC’
DYNAMICS AND OUTSTANDING CHARACTERISTICS
OF INVESTMENT COLLABORATION OF UKRAINE AND
EUROPEAN UNION IN CONTEXT OF ECONOMIC CRISIS
464
«Journal of European Economy»
in 2011
Nobel Prize Winners
Roland EISEN
THREE HEROES OF LABOUR MARKET RESEARCH –
PETER A. DIAMOND, DALE T. MORTENSEN
AND CHRISTOPHER A. PISSARIDES OBTAINED
THE NOBEL PRICE IN ECONOMIC SCIENCES FOR 2010
№2
p. 220
№1
p. 116
Criticism and bibliography
Mykola MATVIIV
CHEMICAL INDUSTRY IN UKRAINE: ECONOMIC TRANSFORMATIONS AND PROJECTS

journal of european economy

Transcription

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