Labor indicators and manufacturing companies ownership patterns in Russia and its regions: results of quantitative analysis
DOI:
https://doi.org/10.24136/oc.2018.014Keywords:
foreign direct investments (FDI), manufacturing industry, employment effects, economic productivity, economic crisisAbstract
Research background: There has been an extensive process of foreign and joint ownership enterprises establishment in the Russian economy since 2006. Domestic manufacturing industry has been experiencing certain pressure on behalf of foreign direct investment bringing new technologies and higher labor requirements.
Purpose of the article: The aim of this paper is to investigate differences in employment strategies and labor indicators in the case of enterprises in foreign and joint ownership (FJO) and domestic enterprises in Russian ownership (RO). We analyze the manufacturing industry in Russia and its regions under conditions of stable and crisis periods.
Methods: The study enhances the analysis of Rosstat?s statistical data for 2005?2016 and applies ANOVA method to compare the employment results for companies with different ownership patterns. The research is carried out both at the national level of the Russian Federation and at the regional level according to the regions.
Findings & Value added: The study identifies significant decline in employment and in-crease in productivity for the period of 2005?2016. In contrast to the crisis of 2008?2009, in 2014?2016 there has been no sharp drop in employment. However, there is a substantial decline in real salaries which is comparable to the crisis of 2008-2009. According to ANOVA, statistically significant differences in labor indicators between FJO and RO companies are manifested. RO companies dominate in employment and payroll funds, while FJO enter-prises have better productivity results with a higher average salary. FJO companies demonstrated faster growth in employment and payroll fund in relatively stable conditions (2012?2013). However, they reacted with a significant reduction in employment for a new crisis (2014?2016), although the creation of new FJO enterprises continued in separate regions of Russia. The results can be used in social policy to regulate the employment and earnings of industrial workers in the current economic conditions.
Downloads
References
Aitken, B. J., & Harrison, A. E. (1999). Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. American Economic Review, 89(3). doi:10.1257/aer.89.3.605. DOI: https://doi.org/10.1257/aer.89.3.605
View in Google Scholar
Analytical Center under the Government of the Russian Federation. (2016). Employment, income and personal consumption: regional differences. Socio-economic crisis in Russia Bulletin. Retrieved from: http://ac.gov.ru/files/publi cation/a/9465.pdf (28.02.2017).
View in Google Scholar
Antonescu, D. (2015). Empirical analysis of foreign direct investments at NUTS 2 region, in European Union and Romania. Procedia Economics and Finance, 22. doi: 10.1016/s2212-5671(15)00284-1. DOI: https://doi.org/10.1016/S2212-5671(15)00284-1
View in Google Scholar
Barnes, J., Kaplinsky, R., & Morris, M. (2004). Industrial policy in developing economies: developing dynamic comparative advantage in the South African automobile sector. Competition & Change, 8(2). DOI: https://doi.org/10.1080/1024529042000271416
View in Google Scholar
Bellak, C. (2004). How domestic and foreign firms differ and why does it matter? Journal of Economic Surveys, 18(4). doi: 10.1111/j.0950-0804.2004.00228.x. DOI: https://doi.org/10.1111/j.0950-0804.2004.00228.x
View in Google Scholar
Buys, A. (2010). Ownership and innovative behavior. The case of South African automotive component manufacturing industry. Proceeding Technology Management for Global Economic Growth (PICMET): 1-9.
View in Google Scholar
Charles, K. K., Hurst, E., & Schwartz, M. (2018). The transformation of manufacturing and the decline in U.S. employment. SSRN Electronic Journal. doi: 10.2139/ssrn.3154376. DOI: https://doi.org/10.2139/ssrn.3154376
View in Google Scholar
Chen, Z., Ge, Y., & Lai, H. (2011). Foreign direct investment and wage inequality: evidence from China. World Development, 39(8). doi: 10.1016/j. worlddev.2010.12.006. DOI: https://doi.org/10.1016/j.worlddev.2010.12.006
View in Google Scholar
Decreuse, B., & Maarek, P. (2015). FDI and the labor share in developing countries: a theory and some evidence. Annals of Economics and Statistics, 119/120. doi: 10.15609/annaeconstat2009.119-120.289. DOI: https://doi.org/10.15609/annaeconstat2009.119-120.289
View in Google Scholar
Dogaru, T., Burger, M. J., Karreman, B., & van Oort, F. G. (2014). Functional and sectoral division of labour within Central and Eastern European countries: evidence from Greenfield FDI. SSRN Electronic Journal. doi: 10.2139/ssrn.2417250. DOI: https://doi.org/10.2139/ssrn.2417250
View in Google Scholar
Eurostat Statistics Explained. (2016). Glossary: statistical classification of economic activities in the European Community (NACE). Retrieved from: http://ec.europa.eu/eurostat/statistics-explained/index.php/Main_Page (24.02.2017).
View in Google Scholar
Fiorini, M., Hoekman, B., & Malgouyres, C. (2016). Services policy reform and manufacturing employment: evidence from transition economies. SSRN Electronic Journal. doi: 10.2139/ssrn.2879325. DOI: https://doi.org/10.2139/ssrn.2879325
View in Google Scholar
Gaidar Institute for Economic Policy. (2016). Real-time monitoring of the economic situation in Russia: trends and challenges for socio-economic development. Retrieved from: http://iep.ru/files/text/crisis_monitoring/2016_2-20_februa ry.pdf (27.02.2017).
View in Google Scholar
Girma, S. (2005). Safeguarding jobs? Acquisition FDI and employment dynamics in U.K. manufacturing. Review of World Economics, 141(1). doi: 10.1007/s10290-005-0020-1. DOI: https://doi.org/10.1007/s10290-005-0020-1
View in Google Scholar
Girma, S., Thompson, S., & Wright, P. W. (2002). Why are productivity and wages higher in foreign firms? Economic and Social Review, 33(1).
View in Google Scholar
Gurkov, I., Kokorina, A., & Saidov, Z. (2017). The cul-de-sac of foreign industrial investments to Russia. Post-Communist Economies, 29(4). doi: 10.1080/14631377.2017.1339536. DOI: https://doi.org/10.1080/14631377.2017.1339536
View in Google Scholar
Hanousek, J., Kočenda, E., & Maurel, M. (2011). Direct and indirect effects of FDI in emerging European markets: a survey and meta-analysis. Economic Systems, 35(3). doi: 10.1016/j.ecosys.2010.11.006. DOI: https://doi.org/10.1016/j.ecosys.2010.11.006
View in Google Scholar
Huang, C.-H., & Yang, C.-H. (2016). Ownership, trade, and productivity in Vietnam’s manufacturing firms. Asia-Pacific Journal of Accounting & Economics, 23(3). doi: 10.1080/16081625.2016.1188449. DOI: https://doi.org/10.1080/16081625.2016.1188449
View in Google Scholar
Institute of World Economy and International Relations of the Russian Academy of Sciences. (2015). Russia and the World: 2016. Annual Forecast: Economy and Foreign Policy. Retrieved from: http://www.imemo.ru/files/File/ru/publ/ 2015/2015_024.pdf (27.02.2017).
View in Google Scholar
Iwasaki, I., Mizobata, S., & Muravyev, A. (2018). Ownership dynamics and firm performance in an emerging economy: a meta-analysis of the Russian literature. Post-Communist Economies, 30(3). doi: 10.1080/14631377.2018.1442036. DOI: https://doi.org/10.1080/14631377.2018.1442036
View in Google Scholar
Javorcik, B. S. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94(3). doi: 10.1257/0002828041464605. DOI: https://doi.org/10.1257/0002828041464605
View in Google Scholar
Jenkins, R. (2004). Globalization, FDI and employment in Viet Nam. Transnational corporations. UNKTAD, 15(1). doi: 10.1080/ 1024529042000271416.
View in Google Scholar
Jude, C., & Pop Silaghi, M. I. (2015). Employment effects of foreign direct investment. New evidence from Central and Eastern European countries. SSRN Electronic Journal. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm? abstract_id=2607520 (27.02.2017). DOI: https://doi.org/10.2139/ssrn.2607520
View in Google Scholar
Karpaty, P., & Bandick, R. (2007). Foreign acquisition and employment effects in Swedish manufacturing. SSRN Electronic Journal. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1030512 (27.02.2017). DOI: https://doi.org/10.2139/ssrn.1030512
View in Google Scholar
Lenart, Ł., Mazur, B., & Pipień, M. (2016). Statistical analysis of business cycle fluctuations in Poland before and after the crisis. Equilibrium. Quarterly Journal of Economics and Economic Policy, 11(4). doi: 10.12775/EQUIL.2016.035. DOI: https://doi.org/10.12775/EQUIL.2016.035
View in Google Scholar
Mehta, S. (2016). Innovation and employment: a study of Indian manufacturing sector. Millennial Asia, 7(2). doi: 10.1177/0976399616655032. DOI: https://doi.org/10.1177/0976399616655032
View in Google Scholar
Nazarczuk, J., & Krajewska, A. (2018). Local determinants of foreign direct investment in Poland: the role of relative distance. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(1). doi: 10.24136/eq.2018.004. DOI: https://doi.org/10.24136/eq.2018.004
View in Google Scholar
Onaran, O. (2008). Jobless growth in the Central and East European countries: a country-specific panel data analysis of the manufacturing industry. Eastern European Economics, 46(4). doi: 10.2753/eee0012-8775460405. DOI: https://doi.org/10.2753/EEE0012-8775460405
View in Google Scholar
Pietrucha, J., Żelazny, R., Kozłowska, M., & Sojka, O. (2018). Import and FDI as channels of international TFP spillovers. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(1). doi: 10.24136/eq.2018.003. DOI: https://doi.org/10.24136/eq.2018.003
View in Google Scholar
Próchniak, M. (2011). Determinants of economic growth in Central and Eastern Europe: the global crisis perspective. Post-Communist Economies, 23(4). doi:10.1080/14631377.2011.622566. DOI: https://doi.org/10.1080/14631377.2011.622566
View in Google Scholar
Robertson, G. B., & Teitelbaum, E. (2011). Foreign direct investment, regime type, and labor protest in developing countries. American Journal of Political Science, 55(3). doi: 10.1111/j.1540-5907.2011.00510.x DOI: https://doi.org/10.1111/j.1540-5907.2011.00510.x
View in Google Scholar
Russian Federal State Statistics Service (2017). United Interdepartmental Statistical Information System. Retrieved from: http://www.fedstat.ru /indicators/start.do. (24.02.2017).
View in Google Scholar
Spitsin, V. V., Mikhalchuk, A. A., Spitsina, L.Yu., Shabaldina, N. V., & Novoseltseva, D. A. (2015). Comparative analysis of economic and social results of foreign and domestic firms: case Russian electronic industry. In International Business Information Management Association conference, IBIMA: 26th International Conference. Madrid: IBIMA.
View in Google Scholar
Spitsin, V. V., Mikhalchuk, A. A., Spitsina, L. Yu., Tyuleneva, N. A., & Novoseltseva, D. A. (2016). Manufacture of transport equipment. social results of domestic and foreign firms: case manufacture of transport equipment in Russia. International Journal of Economics and Financial Issues: International Academic Journal, 6(1).
View in Google Scholar
Spitsin V. V., Mikhalchuk A A., Chistyakova N. O., & Spitsina L. Yu (2018). Development of innovative industries in Russia under unfavourable external environment. Equilibrium. Quarterly Journal of Economics and Economic Policy. 13(3). DOI: https://doi.org/10.24136/eq.2018.023
View in Google Scholar
Staehr, K. (2017). Capital flows and growth dynamics in Central and Eastern Europe. Post-Communist Economies, 30(1). doi: 10.1080/14631377.2017.136219. DOI: https://doi.org/10.1080/14631377.2017.1362195
View in Google Scholar
Temouri, Y., Driffield, N. L., & Añón Higón, D. (2008). Analysis of productivity differences among foreign and domestic firms: evidence from Germany. Review of World Economics, 144(1). doi: 10.1007/s10290-008-0136-1. DOI: https://doi.org/10.1007/s10290-008-0136-1
View in Google Scholar
Unified Interdepartmental Statistical Information System (UniSIS), Russia. (2017). Retrieved from: http://www.fedstat.ru/indicators/start.do (28.07.2017).
View in Google Scholar
Varblane, U., Mickiewicz, T., & Radosevic, S. (2002). The value of diversity: foreign direct investment and employment in Central Europe during economic recovery. SSRN Electronic Journal. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=418541 (28.07.2017). DOI: https://doi.org/10.2139/ssrn.418541
View in Google Scholar
Vukšić, G. (2015). Effects of private ownership, trade, and foreign direct investment on labor productivity growth in transition economies: evidence from the Croatian manufacturing industry. Emerging Markets Finance and Trade, 52(2). doi: 10.1080/1540496x.2015.1011540. DOI: https://doi.org/10.1080/1540496X.2015.1011540
View in Google Scholar
Wang, J., & Wang, X. (2015). Benefits of foreign ownership: evidence from foreign direct investment in China. SSRN Electronic Journal. Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2581295. (28.07.2017). DOI: https://doi.org/10.2139/ssrn.2581295
View in Google Scholar
Yucel, G. E. (2014). FDI and economic growth: the case of Baltic countries. Research in World Economy, 5(2). doi:10.5430/rwe.v5n2p115 DOI: https://doi.org/10.5430/rwe.v5n2p115
View in Google Scholar
Zemtsov S. P., Pavlov, P. N., & Sorokina, A. V. (2016). Specifics of cluster policy in Russia. Equilibrium. Quarterly Journal of Economics and Economic Policy,11(3). doi: 10.12775/EQUIL.2016.023. DOI: https://doi.org/10.12775/EQUIL.2016.023
View in Google Scholar