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Global Institutions and Their Impact on the Capitalization of Oil Companies

Global Institutions and Their Impact on the Capitalization of Oil Companies

Journal of Institutional Studies, , Vol. 11 (no. 2),

Among the reasons affecting oil prices, are: decisions taken by OPEC member countries; change in the dollar rate; geopolitical instability, etc. Some researchers adhere to the position that one of the most important factors shaping the demand and supply for oil is the current stage of the business cycle, within which there is an increase and decline in industrial activity with corresponding consequences for companies. According to the results of econometric studies, it was shown that decisions on quotas made by OPEC countries and deviations from them are significant and affect the change in oil prices, which, in turn, should affect the value of shares of oil companies. The problem of the climate agenda and environmental pollution is becoming ever more acute. The issue of sustainable environmental development is part of the UN Millennium Goals and includes reducing greenhouse gas emissions, protecting ecosystems (including the coastal zone) and forests. This direction correlates with the concept of sustainable development, which implies that the present generation will consume in moderation and will not deprive the future generation of the ability to use existing resources (including energy). It is necessary to take into account the trend aimed at the environmental component of the economy, since the transition to “green energy”, the development and improvement of technologies that reduce emissions – all this will affect oil companies in the long term. Another specific risk that may arise from investing in oil companies is the sanctions policy of other states. Firms in the oil industry operate around the world, so even if their headquarters are not located in a country against which sanctions are imposed, they can still be affected, as they will have to reduce activity or freeze projects and cooperation with companies in this country.

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Vertical Restraints as Tools to Reduce Risks Associated with Cooperative Specific Investments (the Logic of Vertical Self-Restraints)

Vertical Restraints as Tools to Reduce Risks Associated with Cooperative Specific Investments (the Logic of Vertical Self-Restraints)

Journal of Institutional Studies, , Vol. 11 (no. 2),

The paper discusses an alternative to vertical integration – the vertical restraints (VRs) which have been the subject of numerous studies in neo-institutional economics. It offers a new approach to analysis of vertical restraints as voluntary self-restraints in the situations of uncertainty. Not limited to consideration of uncertainty generated by market shocks (Rey and Tirole, 1986; Hansen and Motta, 2016), this approach takes into account possible termination of initial contract between firms at the ex post stage, i.e. when specific investments have been already made. Risks of contract termination are especially significant for so-called «cooperative» specific investments which might be defined as investments favorably affecting the outside options of opposite side, i.e. the investor’s partner. Lotteries associated with cooperative specific investments are characterized by higher risk than lotteries associated with selfish specific investments (positively affecting the investor’s outside options) because cooperative specific investments (unlike selfish specific investments) increase the risk of initial contract termination and often worsen the investor’s outside options. Firms actively respond to risk of contract termination by choosing an under-investment strategy. The problem of underinvestment could be solved by an advance compensation paid by a supplier to retailers for taking risk associated with specific investments. Unfortunately, the implementation of this scenario is complicated by threat of double moral hazard. VRs voluntarily adopted by the supplier may be considered as substitutes to such compensation. They can increase the attractiveness of lotteries associated with specific investments by improving the retailer’s probability beliefs or payoffs in uncertain outcomes: VRs redistribute control in favor of the dealers reducing the uncertainty they face; VRs may be interpreted as an element of the signaling activity aimed to convince the dealer of the supplier’s willingness to continue cooperation at the ex post stage; in case the supplier prefers to interrupt the business agreement with the dealer at the ex post stage, the VRs, such as exclusive territories, will ensure that the dealer gets at least partial compensation for contract termination; and finally, VRs limit the possible redistribution of quasi-rent between the supplier and the dealer in the internal trade.

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Institutional Support of the Sharing Economy in the Development of Urban Environment

Institutional Support of the Sharing Economy in the Development of Urban Environment

Journal of Institutional Studies, , Vol. 11 (no. 2),

The aim of this study is to develop an institutional support algorithm that ensures the development processes of a sharing economy while creating a comfortable urban environment. The study identified the prerequisites for the development of a sharing economy in Russian practice, in particular, the potential for reducing transaction costs, the rapid development of digital technologies, the increase in dysfunctions of public administration and social security institutions in the Russian economy, the transformation of the needs and motives of generations, which transforms citizens' values, and also motives of their participation in economically unprofitable projects. A systematization of projects of a sharing economy using types of public goods, including transport, education, culture, housing and public utilities, social security, environmental protection, etc., as well as the subject of the relations that underlie this project (joint consumption, production, training financial education) was carried out. Using the example of co-production institutions as well as financial support, an algorithm for the institutional support of the development of a share economy, including such steps as identifying incentives for potential participants, including representatives of government, business, and ordinary citizens to participate in a particular share economy project; definition of norms and rules that will contribute to the involvement of citizens in a project, approbation of the developed norms and rules in a small area, ensuring the functioning of the digital platform through which interaction, design and analysis of the institutions governing the implementation of this project will be carried out, as well as monitoring received results was described. The implementation of the institutional support algorithm for a sharing economy allows for purposeful shaping the development of the urban environment through the use of advanced digital society technologies.

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Shumpeterian Growth Theory in the Context of the Innovation-Led Transition of Economies

Shumpeterian Growth Theory in the Context of the Innovation-Led Transition of Economies

Journal of Institutional Studies, , Vol. 11 (no. 2),

The paper explores the Schumpeterian stream in economic growth theories, which associates sustainable growth with an endogenous nature of technological progress and an effective market reallocation of resources to the most productive agents generating radical innovations. The resource reallocation is driven by the micro-level process of creative destruction that displaces less effective firms, technologies, or practices by more productive and innovative ones through the market competition. We highlight two interconnected packages of economic growth policies, deriving from Schumpeterian theory, – firstly, measures stimulating a firm-level innovation activity, and secondly, measures supporting a barrier-free environment for a dynamic inter-firm flow of resources and new technologies. We analyze how creative destruction accelerates a country’s total factor productivity (TFP) and how this positive effect is suppressed (f.e., in China or Russia) by fragmentation of economy, i.e. by large intra-industry gaps in the level of firms’ productivity. The Schumpeterian growth theory helps to explain reasons for the “new normal” situation and the slowdown of TFP in developed economies, as well as the problem of a middle-income trap in developing countries. Special attention is given in this connection to the phenomenon of “zombie-firms”. We present a composite comparative analysis of the existing growth theories (Keynesian, neoclassical, evolutionary, institutional and complexity economics), identifying the place of Schumpeterian theory among them. We assess advantages and limitations of this theory in the context of the up-to-date economic thought and the renewed economic policy approaches.

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Quadruple Innovation Helix and New Institutional Initiatives in Russia

Quadruple Innovation Helix and New Institutional Initiatives in Russia

Journal of Institutional Studies, , Vol. 11 (no. 2),

The creation of territories with a high concentration of innovative, scientific and technological potential is a global practice. The theoretical basis of these initiatives is mainly the concept of "innovation helices", involving close interaction of the state, business and higher education (academic) sectors, as well as civil society. In economically developed countries there is a trend towards the concentration of innovative potential. At the same time, there are states with long-term and permanent territorial leaders (USA, France, Russia), and states for which there is the emergence of new territorial entities, gradually acquiring the status of national "places of growth" (China, Germany). In some countries, the regions-innovative leaders were formed by the efforts of the private sector, in others – the instruments of state stimulation played the dominant role. Such initiatives in Russia are significantly inferior in efficiency to foreign analogues. To assess the validity of the regions, which are going to become scientific and educational centers, the article offers tools for diagnosing the innovative potential of territories. Firstly, the assessment of the ratio of domestic R&D costs to technological innovation costs allows determining the deficit or surplus in demand for R&D results. Secondly, the study of statistics of requests in the service "Yandex words", which was used to construct an Index of innovation interest of the population. As the analysis shows, all three subjects of the Russian Federation, proposed for the creation of scientific and educational centers, in general, have the necessary parameters for the implementation of this measure.

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Effectiveness of Monetary Regulation in Conditions of Sanctions

Effectiveness of Monetary Regulation in Conditions of Sanctions

Journal of Institutional Studies, , Vol. 11 (no. 2),

The adaptation process of the Bank of Russia institutional activity to international sanctions was considered in the article. For this, the dynamics of three new special indices – monetary efficiency, monetary stability and monetary freedom – was studied. The ideology of construction of the specified indices is based on the account of two functions of institutes – stabilizing and stimulating – and originates in works of D. North and D. Dzolo. Empirical analysis of these indices showed that international sanctions completely reformatted the activities of the Russian mega-regulator, which began to focus mainly on stabilizing institutional norms. The inconsistent policy of the Bank of Russia with respect to incentive rules reduced the overall effectiveness of monetary regulation. The econometric model has shown that the Monetary Efficiency Index has good predictive properties of the dynamics of GDP. Applied calculations have shown that the Bank of Russia has a fairly large reserve to maintain economic growth even under sanctions. It is shown that the activity of the Bank of Russia have been most effective in 2016–2017 and much less successful in 2015 and 2018. The estimated effect of sanctions together with the attendant negative factors does not exceed 6.5% of GDP annually. Now the stabilization component of the cycle of monetary regulation is almost completely exhausted, and therefore the further practice of the mega-regulator should be associated with the use of reserves of incentive measures. Otherwise, Russia risks stabilization without development, which is equivalent to latent degradation.

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Informal Institutions of The Planned Socialism and Its Influence in The Prose of Sergey Dovlatov

Informal Institutions of The Planned Socialism and Its Influence in The Prose of Sergey Dovlatov

Journal of Institutional Studies, , Vol. 11 (no. 2),

The main hypothesis of this paper is that S. Dovlatov's prose contains detailed description of informal institutions of the Soviet planned economy and their influence on everyday economic decisions. Therefore, the study of this prose is useful for understanding the problems of the economic system of planned socialism, in particular, its lag behind the capitalist system and general degradation. As you know, S. Dovlatov considered himself not to be a “writer” who writes about what people live for, but a “storyteller” writing about how people live. However, he often talked about the experience of his own life: it is not by chance that most of his works are written in the first person. In general, the description of “how people live” will inevitably touch upon the norms of behavior of these people, the rules that affect their economic and social decisions, and these decisions themselves. Therefore, S. Dovlatov's prose can be considered as a reliable “cast” of the influence of informal and formal institutions of a planned economy on the standard of living of people, the possibility of their self-realization, as well as on the production potential of such an economy. In this regard, the work of S. Dovlatov may be useful for everyone involved in the comparative analysis of economic systems, in general, and in the analysis of planned economy in particular. The most important aspect is the restriction of economic freedoms, in particular, the freedom of entrepreneurship and, as a result, the impossibility of “finding oneself” and fully realizing it in a planned economy. Hence, the sense of absurdity and meaninglessness of life, the sense of hopelessness that so often embrace Dovlatov’s heroes. Furthermore, we can understand his interest to people who are trying to "get away from everyday life". They did it through drunkenness, idle pastime and other types of "immoral" behavior. In addition, special attention is paid to such phenomena of planned socialism of the USSR, as fartsovka and theft in enterprises. All these phenomena are comprehended both on the base of both institutionally oriented economic theory and S. Dovlatov’s works.

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Effective Contract in Higher Education: Some Results of Project Implementation

Effective Contract in Higher Education: Some Results of Project Implementation

Journal of Institutional Studies, , Vol. 11 (no. 2),

The article describes the results of changes in the academic contract of lecturers of the Russian universities, which occurred under the influence of decision-making on the implementation of an «effective contract». It is shown that the transformation of an academic contract is a global trend that reflects deeper social-economic processes. Their results are generally negatively evaluated in the academic community. Changes in the academic contract were initiated from above in Russia. The forced and accelerated transformation of an academic contract was subordinated to the achievement of quantitative indicators of the growth of salaries of university lecturers established in the May Decrees of the President of the Russian Federation 2012. The characteristic of the results of the project implementation of an effective contract is given according to the parameter of the growth of the level of salaries of university lecturers. It is shown that the consequences of the implementation of the project of an effective contract in higher education are significantly different from the expectations of expert designers. The statistics on the growth of salaries of university lecturers revealed signs of a «fake economy» as well as the extent of the reduction in the number of lecturers and their regional aspect are described. However, such a result of the implementation of an effective contract project in higher education such as strengthening the power of the Russian bureaucracy and taking the administrative control of the academic community is quite suitable for reform designers, because it significantly reduces the bargaining position of the academic community in discussing higher education reform.

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Quality Management of The Population in The Regions of Russia

Quality Management of The Population in The Regions of Russia

Journal of Institutional Studies, , Vol. 11 (no. 2),

The issue of sociocultural modernization of the regions, which should ensure the high quality of life of the population in all regions of the Russian Federation, is on the agenda of modern Russia. An adequate method is required for an objective assessment of the results achieved. Abroad and in Russia, a sufficiently large experience has been gained in conducting a retrospective assessment of the quality of life of the population by the index method. However, the use of high-precision neural network technologies is still rare for socio-economic research. As part of the scientific article, the goal has been set, to try to fill this gap by developing and testing the author’s methodology intended not only for retrospective assessment, but also clustering, as well as predicting the quality of life of the population in Russian regions. The adequacy of the results of clustering and forecasting of the conducted research is achieved by solving relevant problems based on neural network technologies in the NeuroSolutions 6 software product. Innovative development of regional economies. The conducted clustering indicates a low quality of the structure of the Russian regions for the studied phenomenon. Currently, in the cluster structure there are no regions characterized by a very high or high quality of life of the population. Most of the subjects of the Russian Federation have substantial reserves for improving the quality of life of the population, and the leading regions are no exception. The results of the medium-term forecasting indicate that significant interregional «gaps» in the quality of life of the population between Russian regions from different groups persist. The results of the empirical research can be a scientific basis for updating the provisions of the socio-economic policy of any Russian region. The universality of the proposed method allows (in the case of a change in the base of comparison for the entire system of indicators) to carry out not only inter-regional, but also cross-country comparisons at the meso-level.

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