Substitution Policy Research Articles

Theoretical approaches to the study of innovative activity of the regional industrial complex

The need to apply innovations in the production of products and the provision of services in the current conditions of sanctions and a total policy of import substitution is beyond doubt. Replacing imports with domestic goods and components is a priority task of state policy in the Russian Federation. The published article discusses theoretical approaches to the study of innovative activity of the regional industrial complex. The authors substantiate the need to apply innovations at the level of the regional industrial complex in terms of improving the regional production system. The essential features of the innovative activity of enterprises are given, the main approaches to its definition are supplemented. The signs of innovative active enterprises and their differences from traditional ones are highlighted. A set of measures is proposed to promote the development of innovative activity of the industrial complex of the Russian Federation. The criteria for the effectiveness of innovative industrial complexes are outlined. In the conclusion of the presented scientific research, the author's definition of innovative activity of enterprises of the regional industrial complex is given, which is the intensity of the innovative activity of enterprises in the region, determined by the frequency of application of innovations in production from the generation of knowledge, ideas to commercialization and obtaining financial benefits.

“Sorry, the product you ordered is out of stock”: Effects of substitution policy in online grocery retailing

Postpurchase out-of-stock (PP-OOS) often happens in an online grocery context, where products appear to be available at the time a consumer places an order, but become OOS when the order is to be dispatched. This paper investigates two substitution policies that can mitigate negative responses: substitutions can match (i) on the dominant attribute and (ii) with a product from the consumers’ past purchase portfolio. According to data collected through two computer-simulated purchase experiments, involving more than 3,000 households and five product categories, matching the substitution on the dominant attribute increases acceptance, but this dominant attribute varies across category differentiation level (flavor for horizontal differentiated categories like cereals or crips vs. brand for vertical differentiated categories like margarine or ketchup). Category differentiation also informs acceptance of national brand or private-label flavor substitutes, such that, same-flavor private label is prefered more in horizontal differentiated categories. Matching on the basis of previous purchases has positive effects for both category differentiation levels, and when combining both policies, the previous purchase matching effect grows stronger for same flavor, rather than same brand, matching. These detailed insights establish several key managerial implications for substitution policies in online grocery contexts.

Strategic directions and ensuring food security of the Republic of Kazakhstan

Object: The agro-industrial complex of Kazakhstan was and remains a complex universal structure formed at the junction of industrial and agricultural production. The complexity of the development of the agro-industrial complex, as one of the potential drivers of macroeconomics, is determined by the uneven functioning of its constituent industries: agriculture, industries producing means of production for agriculture, processing industries, infrastructure industries, which are interconnected. The purpose of this study is that the authors of the article substantiate the problems and complexity of the agro-industrial complex of Kazakhstan in terms of sustainable development and innovation. The characteristics of the agricultural sector of the economy are systematized.Methods: Review of the works of researchers, analytical, economic and statistical, desk research, systematic approach.Results: The current situation in the agricultural sector of Kazakhstan is analyzed: The dynamics of exports and imports with the EAEU countries are presented; The growth rates of export and import of agricultural products from Kazakhstan are calculated; The structure of Kazakhstani exports is shown, the export of the most important goods is reflected; The dynamics of investments in the agro-industrial complex by type of economic activity is shown; the growth rate of investments in the agricultural sector of the country is calculated. Macro factors influencing the development of the agro-industrial complex of Kazakhstan are shown. Internal factors of the ineffective development of the agricultural sector are identified. The negative consequences of the long-term implementation of the import substitution policy in our country are reflected. The scenarios of the development of the agro-industrial complex of Kazakhstan are considered and their comparative analysis is given.Conclusions: Strategic directions for the development of the agro-industrial complex of Kazakhstan have been developed, aimed at reducing the gap between the agro-industrial complex of developed countries. The results of the above study can contribute to expanding the scope of study on the development of the economy of the Republic of Kazakhstan, as well as act as a recommendatory basis for their solution.

International technology transfer as an effective tool of export-oriented import substitution in Russia

The aim of this study is to determine the prospects of the international transfer technologies in the Russian market. The sanctions imposed on Russia by the EU countries and the United States have led to a clear understanding of the danger of dependence on imports. In 2014, an import substitution program was launched by the Russian government, and it has already shown the positive results. Some industries showed the increasing the share of domestic products by 15-25% Nevertheless, simple import substitution can also have a negative impact on the enterprise. For example, it can decrease the productivity and the product quality. Not all enterprises can offer competitive products without imported components, technologies, and trained personnel, even for the domestic market. No doubt, the interests of domestic producers must be considered in the first place, but it is necessary to make sure that Russian products are also interesting for the foreign markets. That is why the government set the task of moving from the policy of simple import substitution to the policy of export-oriented import substitution. Russia should improve its performance in the export of non-resource goods. Unfortunately, simple localization can be quite risky for the economy. Russia should be more actively involved in international technology transfer. The article examines the weaknesses and strengths of the Russian innovation system, as well as the opportunities that open for Russian business and Swiss companies, that transforms innovative and patented technologies developed by Swiss universities and international research centers into global successful businesses.

Development of strategic alliances between Russia and Hungary in the field of pharmaceuticals

The development of strategic alliances between Russian and foreign pharmaceutical companies allows not only to introduce biotechnologies in the domestic market, but also to strengthen the policy of import substitution and increase export volumes. That is why it is important to support the creation and functioning of strategic alliances at the state level. The purpose of this article is to study the creation and development of strategic alliances between Russia and Hungary, paying attention to the formation of alliances in the field of pharmaceuticals. In order to achieve this goal, the indicators of export-import operations between Russia and Hungary in the field of “pharmaceutical products”, as well as the main strategic alliances operating between the two countries were considered. It is assumed that the development of Russian-Hungarian strategic alliances in the field of pharmaceuticals with localization of production will help to achieve the goals of the import substitution policy in the field of drug production, as well as to intensify export operations. To test this hypothesis, documents published in the public domain were analyzed, including statistical data on export-import operations in the pharmaceutical market between Russia and Hungary. In general, it was proved that at the present stage of development of the pharmaceutical market of the Russian Federation, it is important to support the creation and functioning of strategic alliances, which will strengthen Russian positions not only in the domestic market, but also in the international market. Thus, the Russian Federation should actively develop and support the development of localized strategic alliances using various methods, which will increase the share of domestic biotechnologies and ensure their export.

Import substitution in the manufacturing industries and its impact on the state of the domestic market (on the example of the North caucasian Federal District of Russia)

Purpose:of the study is to reveal the potential of individual manufacturing industries of the North Caucasian Federal District of Russia in import substitution.Methods:the study is based on the use of a systematic approach, the use of methods of economic and statistical analysis, scientific abstraction, analogies and scientific generalizations, the macroeconomic and geopolitical context was taken into account, and methods of predictive analytics were used.Results: an analysis of the state of the clothing, footwear, woodworking and processing industries using the methods of predictive analytics shows that the district has the potential and resources for import substitution. To do this, it is necessary to revive these industries on a new technological basis and expand the legal, economic and financial freedom of action for existing actors. To intensify production processes in industries and increase the productivity of production factors, it is advisable to include individual operations in technological value chains carried out in other regions or create clusters or a group of clusters with the participation of enterprises from related industries.Conclusions and Relevance: in the North Caucasian Federal District of Russia, it is possible to implement an import substitution policy in the textile, clothing, footwear, woodworking and processing industries. The implementation of such a policy will reduce the level of import dependence, replace imported products with domestic counterparts. This statement is based on the availability of raw materials, technologies and labor resources in the district. The implementation of import substitution measures will have an important social and economic effect, which consists in the fact that it becomes possible to reduce unemployment in the district and create new jobs, as well as replenish regional budgets.

On the Issue of the Effectiveness of Import Substitution Policy in the Agricultural Sector in the Conditions of Special Economic Measures Adopted by the Russian Federation

The special economic measures adopted by the Russian Federation in 2014 as a response to economic sanctions of a number of foreign states have become the main reason for a large-scale import substitution policy affecting key sectors of the economy. In particular, development trends in agricultural sector continue to be observed today. Despite the fact that the implementation of import substitution policy is successful, the question of its effectiveness remains. The purpose of the research was to study main results of the implementation of import substitution policy in the agricultural sector and make conclusions of its effectiveness. In addition, we also put forward a number of recommendations to increase the effectiveness of the implementation of the import substitution policy in the agricultural sector, since the not all categories of import substituting goods show significant changes in the volume of production, exports or import. As the study found the Russian Federation adheres to the strategy of export-oriented import substitution. We concluded that work to improve the efficiency of the implementation of the import substitution policy should continue. Keywords. Import substitution policy, special economic measures, import-substituting goods, agricultural products, production, export, import.

Support for digitalization of Russian import substitution in the context of sanctions policy

The paper analyses how effective import substitution policy can contribute to the achievement of Russia’s technological sovereignty, as well as improving national competitiveness and resilience to the sanctions factor. The purpose of the article is to provide recommendations to the system of export state support to stimulate digitalization in the process of import substitution in Russia. What makes the approach special is the analysis of the dynamics of patent activity in the Russian ICT (Information and Communication Technology) segment for the period 2010–2021 and critical analysis of import substitution policy results for the period 2014–2021. Our results show that stimulating of ICT competitive goods supply is necessary to optimize Russian positioning in international trade. The article also considers that in the conditions of sanctions against Russian economy, it is highly necessary to overcome the country’s excessive dependence on import. In conclusion, the author presents the key areas of stimulating digitalization of import substitution in Russia under sanctions.

A game theoretic approach of optimal adoption time of blockchain: A case of ship operators

With increasing uncertainties in the global economy, companies are facing fierce competition. Blockchain has the potential to enhance companies’ competitiveness by streamlining processes, improving productivity and reducing costs. It is meaningful to study whether and when companies would adopt blockchain and under what conditions. We develop a game theoretic model to analyse the introduction of blockchain to companies from a big customer with bargaining power. In this study, ship operators need to decide their optimal adoption time when facing a request from a big shipper to adopt blockchain with a threat of substitution policy from the shipper. An algorithm is developed to obtain the numerical solutions of ship operators’ optimal adoption time. Our analysis suggests that 1) the substitution policy only matters to small companies and is only necessary under fixed pricing model; 2) a threshold applies for substitution ratio and cut-off time to effectively induce small companies to adopt blockchain early; 3) blockchain developers should consider mixed pricing model instead of fixed pricing model for faster and wider blockchain adoption; 4) blockchain initiators should focus more on improving the technology’s cost-effectiveness rather than rely heavily on externalities like substitution policies to promote blockchain adoption.

Методика обеспечения экономической безопасности регионов на основе снижения их зависимости от импортных поставок и использования резервов развития внутреннего рынка

The article substantiates the directions of development of constructive tools in the field of implementation of the state policy of import substitution in the context of a multiple increase in sanctions pressure on the Russian economy. The conclusion is formulated about the long-term nature of aggressive actions by unfriendly states and their associations against the Russian Federation and its allies. A methodology has been developed to ensure the economic security of regions based on reducing their dependence on imports and the use of reserves for the development of the domestic market.

The Import Substitution Trap in the Realities of the Automotive Industry.

—The article examines mechanisms underlying the formation of the “import substitution trap,” which is a stable ineffective institution that serves as a means of protecting national producers from foreign competition. The costs and risks of rooting this institution in the Russian automotive industry are analyzed, the import substitution strategies of the Russian government at the current stage of the industry’s development are investigated, the experience of import substitution in the foreign automotive industry is summarized. The conclusion is substantiated that the import substitution policy brings short-term effects but is disadvantageous in the long term. Domestic substitutes can gain a strong market position but their success is fragile and requires continued government support and protectionist patronage. The author shows that the policy of import substitution becomes successful when it relies on competition, when the domestic import substitute, having entered the market and strengthened its position, is gradually deprived of preferential conditions, and the state support of its manufacturer is gradually cut while the market is transferred to a “freewheeling” mode for all players.

Dynamic Substitution for Selling Multiple Products under Supply and Demand Uncertainties

Substitution is a commonly adopted strategy for matching the demand mix by appropriately allocating the supplies. The recent development of information technology has allowed firms to easily swap products to meet consumers’ preferences. When formulating substitution policies, firms have to take into account the supply and demand conditions, as well as the cost and benefit of substitution. We formulate a dynamic model, in which the firm replenishes the product inventories from uncertain sources and dynamically allocates the available products to meet the uncertain demands with the flexibility of substitution. To address the analytical challenge associated with multi‐product management, we develop a heuristic algorithm that leverages the value of substitution, while allowing separability of future profit among the products. This heuristic algorithm iteratively solves a transportation problem in a network with the reverse Monge property. The application of the reverse Monge property allows us to deal with general substitution structures, which generalizes the commonly studied downward substitution models. Given the product inventories, the derived allocation policy is asymptotically optimal when the firm can frequently remix the products to fulfill the received demands. Through an extensive numerical analysis, we demonstrate that the heuristic policy yields good performance measured by the percentage profit gap from an upper bound problem. We also show that substitution can generate significant benefits when the supply capacities are moderate, the supply and demand uncertainties are high, or the replenishment cycle is short.

Strategic guidelines for import substitution in Russia in the context of systemic transformations

The subject of the study is the parameters and key features of the structure and volume of imports of the Russian Federation. The authors consider in detail the key aspects and trends of the import of foreign products of final and intermediate consumption in the Russian Federation, highlight the risks and threats to the sustainable development of the Russian economy in the context of ongoing systemic transformations caused by the sanctions confrontation that escalated in 2022. The logic and tools of the implemented empirical assessments are based on a theoretical and methodological analysis of determining the strategic guidelines for the formation of foreign trade and the tools produced to assess its effectiveness, and also relies on the approach proposed by the authors to determine the priorities of import substitution policy, taking into account the "severity" of the problem and prospects for economic development. The main conclusion of the study is the need to intensify import substitution processes in the most vulnerable areas of supplies of goods and components to the Russian Federation (machinery, equipment and equipment, chemical industry products, metals and products made of them, plastics, rubber and rubber) from the so-called unfriendly countries (Western European states, USA and Japan, etc.) Given that they account for about 28.5% of imports to Russia, restrictions on further supplies of goods from these countries pose serious risks to the sustainable socio-economic development of the Russian Federation in the short term. The novelty and theoretical significance of the study lies in the proposed concept of choosing an import substitution policy depending on the degree of vulnerability of individual industries to localization of import supplies, as well as depending on the scale of the risks of sustainable development of the national economy.

Integrating Sustainable Trade Principles in Uzbekistan

This article is an assessment of the current state of affairs in Uzbekistan’s sustainable development goals (SDG)-related policies. It is based on an analysis of UN compiled data on SDGs, and an overview of Uzbekistan’s key SDG-related strategies, as well as unstructured interviews with a dozen respondents. Desk research suggests that Government’s key SDG priorities remain in export promotion, job creation and increased economic competitiveness. Interviews suggest that sustainability is understood as political and economic stability, economic growth, environmental conservation and rule of law. From the SDG issues, respondents identified SME and female entrepreneur support, employment generation and e-commerce as the ones with the highest priority, while concurring that corruption, monopolies and market distortions, low policy implementation capacity and limited public awareness of sustainability were the greatest obstacles. The greatest strength of Uzbekistan in integrating international trade into SDGs is the current reform momentum. Significantly improved relations with neighbours are another strength, with a window of opportunity to improve on regional trade, transit, connectivity, as well as water management and water-energy nexus. The greatest challenge remains the government’s focus on exports, jobs and investments at the expense of other SDGs, as well as the continuation of the import substitution policies.

Analysis of innovative activity of agriculture in the Kabardino-Balkarian republic

The scientific article determines that the global economic crisis, political and economic restrictions, various sanctions and counter-sanctions have become a catalyst for the active growth of the competitiveness of agriculture, an incentive for the further development of innovation in the agro-industrial complex, ensuring the country's food security and implementing the import substitution policy. The agro-industrial complex of the Kabardino-Balkarian Republic has sufficient natural resources and unique climatic conditions. However, in the agricultural sector of the economy of the Kabardino-Balkarian Republic, there are a number of extraordinary problems associated with the use of well-established high-expenditure technologies, principles, and technical means. In this regard, the initiation of innovative activities is being updated, contributing to the progressive strengthening of the efficiency of the functioning of the agro-industrial complex of the Kabardino-Balkarian Republic. An analysis of the innovative activity of agriculture was carried out, and the development of dominant directions for improving the efficiency of the functioning of agricultural enterprises in the Kabardino-Balkarian Republic was carried out. The total level of innovative activity of agricultural organizations in the Kabardino-Balkarian Republic amounted to 10.3% in 2020. The share of organizations involved in the introduction of technological innovations in the total number of all organizations in the Kabardino-Balkarian Republic amounted to 15.0%. Thus, in the Kabardino-Balkarian Republic, measures are being taken to build a high-tech greenhouse complex with a system of continuous vegetable production cycle. All this indicates positive, but not sufficient, shifts in the innovative development of the economy of the agro-industrial complex of the Kabardino-Balkarian Republic. Production activity in the agricultural sector of the Kabardino-Balkarian Republic is rapidly developing in the conditions of the formation of a favorable conjuncture, improvement of economic conditions in the agricultural sector. From the standpoint of potential resource opportunities, the dominant directions for improving the efficiency of the functioning of agricultural enterprises in the Kabardino-Balkarian Republic should be based on a phased balanced solution to the problems of preserving a favorable environment, the use of natural resource potential, intellectual resources and high-tech intensive and resource-saving modern industries in order to meet the needs of the population in environmentally friendly products..

The unified medical prescription as a tool to promote generic prescription: A cross-sectional study addressing physicians’ perception in Lebanon

INTRODUCTION: The unified medical prescription was implemented as a policy to decrease the overall health expenditures and increase the use of generic drugs. The main objective of this study was to evaluate the perception of Lebanese physicians towards the unified medical Prescription and its impact on the overall generic prescription. Additionally, an overview was assessed concerning the type of drugs that physicians tend more to accept to be substituted to generic alternatives. METHODS: A cross-sectional descriptive study was conducted in Lebanon over a period of three months targeting physicians in their private clinics or in various hospitals using a survey as an instrument. RESULTS: Our findings demonstrated that more than the half of respondents (56.6%) believed that the unified medical prescription preserves the exclusivity for physicians to choose the medication while only 39.5% of physicians think that the unified medical prescription encouraged generic prescription and almost 42% admitted that the unified medical prescription lowers the medical cost for the patient. DISCUSSION: Despite that this new medical form of prescription is a high achievement for the Lebanese Ministry Of Public Health, this last should make essential actions: coordinating the generic drug substitution policy and monitoring its implementation over time and achievement of goals; establishing appropriate pricing system and medicines prices and controlling the interactions between physicians, pharmacists, and pharmaceutical industries; ensure their full commitment; and update the national list of substitutable generic drugs. CONCLUSION: The main objective of the unified medical prescription is to decrease the pharmaceutical expenditure and to provide access to medications for patients with lower socio-economic status. Lebanese physicians reported that this tool did not achieve its goal yet but have an impact on lowering the medical cost for patients and promoting generic prescription.

Toward higher import substitution: does quality governance matter for uptake and pricing of improved local rice in Ghana?

PurposeProduct quality standardization is the solution to market collapses due to quality-insensitive pricing regimes prevalent in West African (WA) rice value chains. However, access to local rice that is differentiated by quality standards is limited. This paper explores feasibility of quality standardization of local rice and evaluates how its price–quality connecting effect depends on retailer characters/reactions.Design/methodology/approachThis study uses panel data from a wholesale randomized control trial (RCT) and three surveys of 135 rice retailers in Ghana.FindingsImproved local food value chains and access to quality differentiated products are impactful entry points for import substitution policies. The strength of interretailer competition, retail infrastructure and wholesaler activities matter for a stronger connection of prices and quality, given uptake of quality-standardized local rice.Research limitations/implicationsAccess to quality-differentiated local rice can be increased via private and third-party certification. This addresses the prevailing inefficient pricing and its related problems. The positive impacts of such access would be magnified by designing quality certification interventions to elicit regular-frequent purchases by retailers and target retailers with adequate retail infrastructure in high competition areas. However, this study only explored profitability and opportunities for strategic behavior as the behavioral basis for quality-sensitive pricing. Other impact mechanisms could be explored in further research that includes consumer data.Originality/valueDespite their difficulty and limited use in value chains studies, RCT and panel data methods are used. This study is the first to empirically analyze feasibility of introducing product standardization, a missing institution in the WA local rice markets.

Generic Medicine and Generic Prescribing in Nepal: An Implication for Policymakers.

Generic medicines are being promoted in many countries for their added benefits over branded drugs, such as reduced price, therapeutic equivalence, and convenience to the patients. However, generic prescribing is still not up to the optimum level in Nepal to assure access to cost-effective, quality medicines to the public and to reduce the overall economic burden and practice-related errors of medications. This review aimed to discuss the current scenario of generic medicine, generic prescribing, hurdles on the one hand, and potentials ways in promoting generic medicine usage and generic prescribing in Nepal on the other. Extensive literature on generic medicine usage and generic prescribing practice in Nepal was reviewed. This review found some of the major challenges to be addressed for the proper implementation of generic medicine prescribing, and utilization. These challenges include lack of facilities and competency to assure therapeutic equivalence of different brand-name medicines, lack of understanding about generic medicines among health care providers (HCPs) and the public, and lack of stringent regulation towards promoting generic medicines. Rational pharmaceutical promotion and awareness about generic medication to the medical students are also inevitable towards promoting the practice of generic medicines. The practice of generic medicine and generic prescribing is not possible without the assurance of therapeutically equivalent generic alternatives. The study recommended the prompt effort of the regulatory authority to enforce the generic prescribing and generic substitution policy through strengthening policies, procedures and laboratory testing to assure citizens’ right to access to cost-effective, and affordable quality medicine, as the Nepal’s National Health and Drug Policy mandated.

Clean energy substitution: The effect of transitioning from coal to gas on air pollution

Air pollution from energy represents a global challenge. China, in particular, is facing a trade-off between growing demands for energy and worsening energy-related air pollution. Energy transition policies were adopted in mainland China in an attempt to reduce air pollutant emissions. This study investigated the causal impact of coal-to-gas (CTG) policies — programs that substitute “dirty” coal for “clean” natural gas — on air pollution. Using a spatial difference-in-difference analysis, we found that the implementation of CTG policies was strongly associated with reduced air pollution. On average, cities that transitioned to gas witnessed a 5.9 and 1.2% drop per year in SO2 and PM2.5 emissions, respectively. Having a neighboring city adopt a CTG policy was also beneficial as it led to a 7.0 and 3.8% reduction in SO2 and PM2.5 emissions. Sensitivity analysis confirmed that these effects were due to the expansion of natural gas use. Further, our study found that the effects of CTG policies on air pollution levels varied by region. CTG policies reduced both SO2 and PM2.5 levels in Southern cities but had no meaningful impacts on Northern cities. Our findings provide a strong rationale for local governments and decision-makers to enact reasonable urban clean energy substitution policies that reduce coal consumption.

Analysis of import substitution policy with an emphasis on environmental issues based on environmental input–output (EIO) model

Analysis of import substitution policy with an emphasis on environmental issues based on environmental input–output (EIO) model