Foreign Capital Participation Research Articles

Современные проблемы в функционировании организаций с иностранным участием в капитале в России

Companies with foreign capital participation are an important part of domestic economy. They ensure the inflow of investments, facilitate access to new technologies, promote the exchange of innovative and managerial experience, and increase industries competitiveness. Under modern conditions, there are many problems that hinder effective functioning of the companies with foreign capital participation in Russia. Geopolitical instability and the risk of changes of the economic situation are among the most significant problems. In addition, bureaucratic obstacles, corruption, and imperfect legislation also create difficulties for foreign investors. All these actualize the issue and classify it as the most important for scientific study in the context of modern Russian economy development and its integration into the world economic system. The purpose of the study is to analyze the situation with the development of companies with foreign capital participation and provide recommendations to ensure their effective functioning in the domestic market. The results are: negative dynamics of decrease in the volume of foreign investments in the Russian economy and the number of companies with foreign participation in capital are established, current problems and factors affecting functioning of organizations with foreign participation in capital in Russia are assessed, the main risks faced by these companies when entering the Russian market, including geopolitical, bureaucratic, economic, technological, legislative and other risks are revealed, external and internal factors limiting the ability to contribute to sustainable development of organizations with foreign participation under the modern conditions of the Russian economy are identified, and recommendations are proposed to ensure the effectiveness of companies with foreign participation in capital in terms of designing development strategy, maintaining relations with stakeholders, ensuring professional development of personnel, and upgrading equipment and introducing innovations. All these will help foreign investors with cultural adaptation and understanding of the laws facilitate their entry into the Russian market, which in turn will improve the investment climate in the country and create favorable conditions for foreign investors in Russia.

ІНОЗЕМНИЙ КАПІТАЛ В БАНКІВСЬКІЙ СИСТЕМІ УКРАЇНИ

A characteristic feature of the third millennium is the deepening of the globalization of economic processes and the integration of world financial systems, and the servicing of national economies by the banking system today cannot be done without the participation of foreign capital. Entry of foreign capital into the banking system of Ukraine has become an objective process of inflow of foreign investments. As world practice shows, the presence of foreign capital in the national banking systems of both industrialized and transition economies is an integral component of economic development The modern aspects of foreign investment in the transition period are analyzing in the article. In the conditions of globalization of the world economy, the attraction of foreign capital through the banking sector of the domestic economy has many advantages and plays a very important role. Studies conducted by World Bank experts claim that in most cases, the inflow of foreign capital into the banking sector can have a significant impact on the macroeconomic indicators of the entire economy. Taking into account the policy of Ukraine’s access to foreign investments, it can be said that the current policy of my country in this matter is quite flexible. In modern market conditions, in the conditions of war, the question of foreign investment in the Ukrainian banking sector is very acute and very urgent. The banking sector is stable and liquid, as it was before the crisis caused by the war. First, banks provide payment services to individuals and legal entities. Free business funds and a significant part of household savings are kept in bank accounts. These funds are used by banks to provide loans. The harmonious and uninterrupted operation of banks in wartime is more important than usual. The banking industry survived the first months of the war with minor losses thanks to the timely actions of the National Bank and banks to ensure the uninterrupted functioning of financial institutions. The economy continues to function and adapt to new conditions. Last but not least, this became possible thanks to the uninterrupted function- ing of the banking system. In the first hours of the large-scale invasion, the NBU introduced a number of measures that not only quelled panic among Ukrainians, but also restored trust in banks and increased account balances.

СИСТЕМЫ СОВМЕСТНОГО ПРЕДПРИНИМАТЕЛЬСТВА В РЕГИОНАХ РОССИИ: СТРУКТУРНО-КОЛИЧЕСТВЕННЫЙ И ДИНАМИЧЕСКИЙ АНАЛИЗ

Any state strives to invest not only its own funds in the development of its economy, but also to attract foreign investment. This makes it possible to open new production facilities, as well as attract advanced technologies and experience of foreign specialists. This article discusses the problems of the development of joint entrepreneurship systems in the Russian Federation at the latest historical stage. The subject of the study is the organizational and economic relations that have arisen and developed in the course of the activities of joint ventures with the participation of foreign capital. The purpose of the study is to determine the current situation of joint entrepreneurship in Russia. To achieve this goal, a structural and quantitative analysis of the indicators of the development of joint entrepreneurship in macro-regions (federal districts) was carried out Interregional and intraregional imbalances have been identified, factors negatively affecting the development of joint forms of doing business in the country have been identified. As a result, based on the data obtained, it was revealed that during the period under review there was a decrease in the number of joint ventures on the territory of the Russian Federation. Foreign investors are afraid to invest their funds in long-term investments due to the unstable economic situation in the country. The presence of sanctions also does not add to the investment attractiveness. An analysis of the activity of joint entrepreneurshi p by region showed that only a few have developed programs for the development of foreign capital participation in joint ventures. The rest are practically not developing in this direction. As a result of the work performed, the author formulated measures to support and stimulate the development of joint entrepreneurship in the country as a whole and in certain regions of Russia in particular

The role of private economy in the socialist-oriented market economy in Vietnam

The author discloses, through the prism of Vietnamese sources, the role of the private sector in the Vietnamese economy, showing that it has changed fundamentally during the 35 years of Đổi Mới implementation; analyzes its place in the structure of the Vietnamese economy and its evolution, as well as its position in comparison with two other sectors, namely the public sector and sector with the participation of foreign capital. The article, based on official Vietnamese sources, reflects the CPV's view of the private sector and the Communist Party's intention to use it in promoting the country's prosperity.
 At the same time, the author introduces the idea that large Vietnamese private groups are indebted to political protection by the leadership of the country, emphasizes the existence of a cronyism and patronizing approach in relations between them. Thus, the private sector can therefore, contribute to economic development and the creation of economic champions but maybe not to a leveled playing field between sectors and within the private sector.
 The paper aims at putting forward the fact that the State is actually piloting the private economy. In reality the Vietnamese authorities seem to adapt to it and take advantage of its development.

Chinese Investment in the UK: Structure, Dynamics, Prospects

The article analyzes China’s investment in the UK. Sectors of the British economy, in which the largest Chinese investments are concentrated, have been recounted. Large British enterprises, acquired by Chinese companies in 2005–2020, have been identified. The dynamics of the expansion of Chinese capital is examined in the context of the political, economic and technological risks that it generates. The article focuses on the study of the argumentation of experts who question the advisability of the active participation of Chinese capital in the development of the UK economy. There are three factors that will negatively affect investment cooperation between the two states. Firstly, there is considerable concern among British politicians about the rise of China’s influence. Secondly, London’s decision to bar Huawei from building 5G networks has worsened UKChina relations. Thirdly, National Security and Investment Bill, now progressing through UK Parliament, will give the authorities additional powers to block investment projects with foreign capital participation on national security grounds. The author concludes that all these factors will lead to a decline in China’s investment in the United Kingdom.

External Security Strategies of Belarus

Under President Lukashenko, three Belarusian national security strategies have been announced: the first in 1995, the second in 2001 and the third in 2011. The first proposal, formulated after Lukashenko’ victory in the presidential elections in 1994, outlined Belarus as a neutral state, unbound to any military block in the absence of external enemies. The direction of the foreign policy pursued by the president of Belarus was reflected in the second strategy, where security against NATO and EU member states was sought in a federal state with the Russian Federation. Under the third national security scheme Belarus was to remain in Russia’s military security system. Nevertheless, an important security factor was considered to be the modernisation of the economy with foreign capital participation and the need to diversify the supplies of fuels, thus reducing the country’s dependence on its earlier partner. The subsequently issued documents: the military doctrine of the State, whose assumptions were published on 20 July 2016, and the Concept of security of the Belarusian state borders for the period 2018–2022, prioritised further development of relations with the Russian Federation and the member states of the Collective Security Treaty Organisation. A new element of the 2019 defence plan is the prevention of external aggression and internal disturbance that contribute to the destabilisation of the state.

FROM DEINDUSTRIALIZATION TO MODERNIZATION AND GROWTH OF INDUSTRIAL PRODUCTION

The article has discussed the features of the formation and development of the industrial sphere in the territory of today's Ukraine, considering the cyclical nature of the passage of socio-economic processes, starting from the time of the fall of the feudal system and the transition to capitalist relations (second half of the 19th century). The evolution of the formation of the fuel and metallurgical base in the Dnieper and Donbas’s with the participation of foreign capital has been investigated. The main priorities of centralized management and planning during the five-year period of accelerated industrialization (1928-1932) have been described. The achievements of the Ukrainian industry on the eve of the independence of the state (1991) have been emphasized - from mining to the creation of high-tech industries (space, aviation, shipbuilding, transport engineering, etc.). The problems of the industrial complex functioning (deindustrialization of the economy, a shortage of qualified personnel, critical dependence on the export of raw materials, low resource efficiency, etc.) has been analyzed. The theoretical foundations of the industrial policy formation in the conditions of transformation processes in the economy, the convergence of economic models of Ukraine and the EU countries have been improved. The international best practice of managing changes in the industrial sphere in the conditions of competition, strengthening manifestations of protectionism in the world market has been summarized. Measures have been developed to enhance the process of entering domestic enterprises to the global added value chains, which will contribute to expanding access to international markets, attracting FDI, and modernizing technologies. The expediency of introducing effective organizational forms of supporting business projects and innovations in the industry, increasing responsibility for the development, adoption, and implementation of engineering, business and management decisions has been substantiated. Recommendations on improving the national industrial policy with a focus on the comprehensive and sustainable development of industrial production to further strengthen the economic security of the state have been proposed.

Foreign Capital Participation and Tax Aggressiveness in Brazilian Companies

This study explores the relationship between tax aggressiveness and foreign capital participation in Brazilian companies listed on the BM & F BOVESPA from 2010 to 2015, using the concept of tax aggressiveness as a reduction of taxable income through tax management and planning (Chen et al., 2010). Observing that previous studies show a significant relationship between tax aggressiveness and ownership structures, this research seeks to understand whether this relationship is significant if there is foreign capital participation in the company. The sample was composed of Brazilian companies listed on the BM&F BOVESPA. Two metrics of tax aggressiveness were used to investigate this relationship: effective tax rate (ETR) and book-tax difference (BTD). The use of these metrics was inspired in a review on tax research by Hanlon and Heitzman (2010), who concluded that ETR and BTD could capture the reduction of taxable income through tax planning. The results showed no significant relationship between foreign capital participation and tax aggressiveness, demonstrating that the origin of equity capital is not a factor of tax aggressiveness.

Attracting Foreign Investment to the Chinese Economy: the Latest Secured Approaches Law

The article examines the current trends of China's current policy in attracting foreign direct investment. Special attention is paid to the analysis of the law of the people's Republic of China on foreign investment, which came into force in 2020 and replaced the three previous laws on enterprises with foreign capital participation. Based on the results of this analysis, a significant increase in the legal protection of foreign entrepreneurs was found. The new system of investment administration based on the application of the «negative list for foreign investments» with a gradual transition from the permissive to the notification procedure for the creation of enterprises of foreign capital is evaluated. It is characterized by a multi-level system of preferential financing areas and, above all, the last generation of these territories, represented by experimental free trade zones. The role of foreign entrepreneurship in overcoming the consequences of the «coronacrisis» is highlighted.

Tax Aggressiveness in Brazilian Companies with Foreign Capital Participation

This study explores the relationship between tax aggressiveness and foreign capital participation in Brazilian companies listed on the BM&F BOVESPA from 2010 to 2015, using the concept of tax aggressiveness as a reduction of taxable income through tax management and planning (Chen et al., 2010). Observing that previous studies show a significant relationship between tax aggressiveness and ownership structures, this research seeks to understand whether this relationship is significant if there is foreign capital participation in the company. The sample was composed of Brazilian companies listed on the BM&F BOVESPA. Two metrics of tax aggressiveness were used to investigate this relationship: effective tax rate (ETR) and book-tax difference (BTD). The use of these metrics was inspired in a review on tax research by Hanlon and Heitzman (2010), who concluded that ETR and BTD could capture the reduction of taxable income through tax planning. The results showed no significant relationship between foreign capital participation and tax aggressiveness, demonstrating that the origin of equity capital is not a factor of tax aggressiveness.

Влияние экономического фактора спекулятивного валютного риска на международный аутсорсинг

The paper presents the results of elementary mathematical and graphical analysis of the indicators characterizing financial conditions of investment activity, as well as analysis of foreign direct investment, external trade balance of Russia for the period from 2006 to 2016, as well as analysis of key performance indicators of organizations with foreign capital participation over the period from 2006 to 2014. Features of coincidence in fluctuations of various indicators are considered. The author draws conclusions about the coincidence in the dynamics of foreign direct investment, the dynamics of the dollar, the foreign trade balance of Russia and the turnover of organizations with foreign capital. The author points out that in the period between 2008 and 2014 there was a crisis period for companies with foreign capital from 2011 to 2012 due to the high amplitude of fluctuations in the us dollar on the Russian market.

Innovative Activities within Ukrainian Insurance Companies

The purpose of this research is to identify the role of innovations in overcoming the problems arising out of activities within insurance companies. Against the background of fluctuating marketing environment and high level of business risks, the staff of insurance companies is in high demand of scientifically substantiated recommendations on the very innovations which could bring business processes to a more increased efficiency level. The research of innovative activities within insurance companies in this paper is done using the following logical sequence: the place of innovations in the deployment of 4 Industrial Revolutions and their role in the modern insurance business (within Ukraine and abroad) about its fundamental and subsidiary business processes is displayed; common problems of national insurance companies and selected risk factors varying in terms of customer market (B2B or B2C), experience and foreign capital participation are described; the most practical innovative solutions for mitigation of identified risks in activities within insurance companies are suggested. The research presents the results of the sample survey of 52 insurance companies. The survey focused on hypotheses relating to as follows: threats to the business environment of insurance companies; directions for employment of innovations to develop insurance companies’ business; differences in assessment of threats to business environment; differences in opportunities and directions of innovations. ІВМ SPSS 20 software was used for processing of the data obtained. The following research methods were used to analyze the data: frequency distribution of variables, cross-tabulation, and nonparametric tests of variables. The research confirms that from 51.5 to 77 % of Ukrainian insurance companies are faced with some difficulties in their performance. The risk factors being the most relevant for insurance companies are the low paying capacity of customers at the insurance market (1st place), high competition (2nd place), imperfect legislation (3rd place). The research identified the following significant problems associated with the company's internal environment: lacking a definite strategic business development plan (1st place), problems involving qualified staff (2nd place), and problems with the interaction of structural units (3rd place). The research empirically lends support to specific directions of putting into practice and nature of innovations necessary for countering specific threats in their activities. Research findings can be of some practical value for improved efficiency of business processes both for Ukrainian and foreign insurance companies operating under the conditions of ever-changing factors of the business environment. Keywords: insurance companies, innovations, business processes, В2С market, В2В market.

Bariery implementacji controllingu w sieciach handlu detalicznego

Głównym celem przeprowadzonych badań była identyfikacja czynników stanowiących barierę wdrażania controllingu w sieciach handlu detalicznego (na potrzeby artykułu terminy sieć handlu detalicznego oraz sieć handlowa stosowane będą zamiennie). Badanie ilościowe przeprowadzono za pomocą narzędzia badawczego, które stanowił kwestionariusz ankiety, zawierający pytania zamknięte, skierowany do pracowników sieci handlowych, głównie specjalistów z działów controllingu, HR, kierowników różnego szczebla oraz dyrektorów. Badania przeprowadzono w dużych sieciach z udziałem kapitału polskiego i zagranicznego. Ich wyniki wykazały, iż najistotniejszą barierę implementacji controllingu stanowi zbyt niski poziom wiedzy na temat sposobów wdrażania controllingu oraz brak odpowiedniego zaplecza finansowego umożliwiającego jego wdrożenie.
 Ze względu na hermetyczność sieci handlowych oraz fakt, iż do tej pory zajmowano się głównie barierami wdrażania controllingu w jednostkach produkcyjnych i usługowych, podjęty w artykule temat uznano za ważny.

THE MATRIX MODEL FOR ASSESSING THE INVESTMENT ATTRACTIVENESS OF AGRICULTURAL ENTERPRISES

The purpose of the paper is concerned with the relevant problem of regional development – the development of methodological instruments for assessing the investment attractiveness of agricultural enterprises. The article discusses the concept of “investment attractiveness” and justifies the author’s position of its content. It has been established that the enterprise is an open system, so its appeal includes both internal and external environment, so the analysis of investment attractiveness of the enterprise is proposed to be carried out in stages, revealing its real and potential opportunities and threats at every economic level. Methodology. The analysis of existing domestic and foreign approaches to assessing the investment attractiveness of agricultural enterprises was carried out and the use of an integrated approach in conducting this investigation was argued. The algorithm of forming an integral indicator for assessing the investment attractiveness of an agricultural enterprise is substantiated. Results. The authors have proposed a methodical approach, the peculiarity of which is the construction of a matrix model for assessing the investment attractiveness of agricultural enterprises on the basis of a generalized indicator of quantitative and qualitative criteria for evaluating their production and financial position and investment potential. Methodical research instruments include mathematical methods of statistical data processing and expert evaluation using the weighing coefficient theory. Practical implications. Approbation of the methodological instruments was carried out on the example of agricultural enterprises of the Dnipropetrovsk region, as a result of which the most acceptable forms of attracting investment capital were proposed. Those companies can expect investments that have high investment attractiveness, which is 10.5% of the investigated producers. Enterprises of the first group are the most preferred for all types of investors: the largest land and labour potential, high results of economic activity. Agricultural enterprises of the second group have significant resource potential and provide 48.6% of gross output; they can be attributed to “strong middle peasants.” Agricultural enterprises with low investment attractiveness can also count on investment funds. We believe that the most acceptable form of their attraction is the creation basis of unprofitable farms of enterprises with the participation of domestic and foreign capital.

Legal forms for attracting foreign investment into Russia’s oil and gas industries

The article analyzes legal forms for attracting foreign investment for the development of hydrocarbon deposits and identifies their advantages and disadvantages. The lack of domestic resources for investment necessitates attraction foreign direct investment into the oil and gas industries, characterized by high capital intensity. However, subsoil users with foreign capital participation take serious risks during the geological subsoil investigation. The main factors behind the Russia’s energy sector stagnationare primarily the imperfections in Russian investment legislation and the absence of well-functioning contractual instruments protecting the interests of each participant in subsoil user legal relationships: the government, subsoil users, operators, and investors. The author analyzes foreign experiences in applying contractual instruments to attract foreign investment for developing oil and gas fields, and explores recent legislative initiatives designed to modernize Russian oil and gas legislation, including the draft federal law “On the peculiarities of joint activities in the subsoil use and on making changes into separate legislative acts of the Russian Federation”. To improve investment attractiveness of Russia’s energy sector, the author estimates new forms of investment agreements, proposes the introduction of amendments to the 1992 Subsoil Law concerning easing existing restrictions on admitting foreign companies to the development of offshore hydrocarbon fields, and to clarify the terminological basis of Russian oil and gas operating agreements to bring it into line with international standards.

Participation of Foreign Capital in Banking System of the Russian Federation

Changes of them political situation in the world, introduction of economic sanctions in regard to the Russian Federation have changed the situation in banking system and have had an impact on the banks activities with foreign participation. The article examines possible variants of foreign capital in the banking system of the Russian Federation, presents the foreign and national practice of the Bank of Russias regulation of foreign investments into the banking sector beginning from 1991 till present. It shows the foreign capital role in own funds (capital), in assets of the Russian Federation banking sphere, in attracting monetary funds of private and legal entities in crediting the real economic sector. It notes that against the general background of decreasing number of the credit organizations of the Russian Federation there is a decrease of the number of the banks with foreign participation, their structural subdivisions. Beginning from 2013, there is a decrease of the foreign capital share. The aggregate charter capital of the national banking system manifests negative trends and other indicators of the banks activities with foreign participation. Beginning from 2014 and up till now, the role of the banks with foreign participation in the banking sector of the Russian Federation is beginning to go down.

Process and product innovations, multi-product status and export performance: firm-level evidence from V?4 countries

Research background: In this paper, we study empirically the relationship between different forms of innovations, multi-product status and export performance of firms from four Visegrad countries. We treat innovations as the key element that can increase the level of firm productivity.
 Purpose of the article: The main objective is to analyze the empirical relationship between different firms of innovation of firms from Visegrad countries and their export performance. In contrast to previous studies that use R&D spending as a measure of innovation, we rather relay on innovation outcomes. Our detailed hypotheses postulate the existence of positive relationships between firm export performance and different forms of innovation. We seek to determine which type of innovation activity is of the greatest importance for exporting and whether it depends on firm size, the level of internationalization, the use of human capital and its sector of activity. In addition, we control for the multi-product status of firms, i.e. whether they sell one or many products.
 Methods: The measures of innovative activity of companies include both spending on R&D as well as its effects, such as product and process innovations. In addition, we control for the multi-product status measured by the share of the main product in total sales of the firm, as well as for other firm-level characteristics. The empirical implementation of the theoretical framework is based on the probit models, applied to the fifth edition of BEEPS firm level data set covering the period 2011?2014.
 Findings & Value added: Our results indicate that the probability of exporting is positively related to both product and process innovations and the multi-product status. In addition, we find that the probability of exporting is related to the set of control variables including labor productivity, firm size, the share of university graduates in productive employment, foreign capital participation and the use of foreign licenses.

Influence of banks with foreign capital participation on ensuring the integration of Ukrainian economy into international financial field

The article gives a brief history of the entry of foreign capital into the banking system of Ukraine. On the banking market of Ukraine there are foreign banks represented by the subsidiaries of residents: Austria, France, Italy, Germany, Sweden, Poland, Greece, Cyprus, Hungary, Netherlands, USA, Turkey, Kazakhstan and Russia. These banks have withstood two deep crises that took place in Ukraine in 2008 and in 2014‒2015 and continue to develop successfully. A separate cluster presents financial indicators calculated for banks with Russian capital. The article analyzes the market positions of banks with foreign capital in the modern Ukrainian market and achievements of banks over the first quarter 2018. Comparative dynamics of key indicators of the leading clusters of banks by the origin of capital over the first quarter of 2018 is given: with state, private Ukrainian, Western and Russian capital. The indicators of the main articles of assets, liabilities, capital, as well as the factors that have the greatest impact on the current state of banks with foreign capital are considered. Financial opportunities for foreign investors for safe entry into the Ukrainian economy are shown. Systemic losses of banks with state-owned Russian capital, which need constant support from the parent structures, are also investigated. This article is a continuation of the study of the state and prospects for the development of banks with state Ukrainian capital; in addition, research on the current state of private Ukrainian banks is being prepared.

New approach to the innovation process in emerging economies: The manufacturing sector case in Chile and Peru

This paper focuses on paths towards innovation and considers different types of innovation. It develops a new framework to analyze the internal and external factors that influence the types of innovation and their relationships with business performance in the manufacturing sector. A proposed theoretical model is tested and used to evaluate the process of innovation by country (Peru and Chile) and companies by size, type of industry, financial aspects and level of patenting. In Chile, the driver is technological innovation in processes, whereas in Peru, it is non-technological innovation. Companies with high perceptions of financial constraints exhibit a preference for the development of marketing innovations to substantially improve production performance; if a company perceives few financial barriers, it increases innovation resources and process innovation to significantly improve market performance. Small businesses increase non-technological innovation by investing in staff to manage the social networks. Moreover, the participation of foreign capital may overcome the institutional voids and lack of support systems. Furthermore, the combination of process and organizational innovation increases export performance, and the effect of the cooperation depends on the type of industry. Finally, we note the limitations and propose future research.

Can Foreign Capital Participation Enhance Commercial Banks’ Market Efficiency?

Banks’ efficiency can be decomposed into their ability in expanding their business with given inputs and ability in making maximum profits with given business scale. The former is defined as the operational efficiency while the latter is defined as the market efficiency. This paper tries to test impacts of foreign capital participation on the Chinese listed commercial banks’ market efficiency with two-stage Data Envelopment Analysis (DEA) approach and Tobit model. The results indicate that more foreign capital participation can help to improve the largest banks’ market efficiency, while weak foreign capital participation cannot help. These findings are important not only for China but also for the other transitional economies and developing economies. DOI: http://dx.doi.org/10.5755/j01.ee.29.1.5444