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TERRA ECONOMICUS

Inter-budgetary aid in Russia: Political and economic factors


TERRA ECONOMICUS, , Vol. 20 (no. 3),

In federal states with large inter-regional differences, an important problem is the effective redistribution of resources through the federal budget. Inter-budgetary assistance in such states performs a number of functions: equalizing, social, stimulating, stabilizing. The distribution of federal transfers between regions is influenced by macroeconomic factors, as well as the institutional environment and political processes. This study aims at identifying the influence of political and economic factors on the distribution of federal transfers between the constituent entities of the Russian Federation. The multifactorial model shows the dependence of the level of federal assistance to the regions in 2020 on the logarithm of own sub-federal budget revenues per capita, the level of social burden on employees, investment activity, area per capita, and the index of political loyalty of the regions. The regionʼs political loyalty index is built on the basis of official data on voting results and voter turnout in the 2016 State Duma elections, the 2018 presidential elections, and the 2020 constitutional amendment referendum. Evaluation of the model by the least squares method confirmed that federal transfers in the Russian Federation perform equalizing, social, and stimulating (investment activity) functions. An ambiguous relationship was found between the level of federal assistance and the regionʼs political loyalty index, which is expressed in clear support for the most loyal regions and a differentiated attitude towards less loyal regions, some of which could receive incentive payments. Research findings can be used to manage institutional environment to increase the effectiveness of inter-budgetary assistance in Russia.
Citation: Malkina M. (2022). Inter-budgetary aid in Russia: Political and economic factors. Terra Economicus 20(3), 6–21 (in Russian). DOI: 10.18522/2073-6606-2022-20-3-6-21

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Stability of the Ponzi scheme phenomenon


TERRA ECONOMICUS, , Vol. 20 (no. 3),

This paper deals with the Ponzi scheme phenomenon. We try to find out the reasons of its stability throughout human history, despite fraud and deceit related to anticipated unrealistic returns. Based on literature review and expert opinion, we classify the core and additional features of the Ponzi scheme lifecycle, and then refer to the results of telephone survey and case study. Our analysis involves processes associated with creation, functioning and destruction of pyramid schemes, as well as the attempts to resuscitate and revive the scheme, e.g., through rebranding. The triggers of financial pyramids are identified based on the cases of the biggest financial frauds and scandals. The viability of modern financial pyramids is illustrated and analyzed using the socio-demographic portrait of the Finiko project participants. The results of the PromRating poll uncovered the motives the participants were guided to invest in modern highly profitable schemes. We conclude that Ponzi scheme participants can hardly be considered innocent victims of fraud. They take decisions on participation in fraudulent schemes quite reasonably. Financial literacy strategies are far from being a panacea for solving this problem. The research implications can be useful for developing measures to counter Ponzi schemes. Further research may shed light on the impact of the digital environment on the modification of financial pyramids and related phenomena.
Citation: Ryzhkova M., Kashapova E. (2022). Stability of the Ponzi scheme phenomenon. Terra Economicus 20(3), 22–38 (in Russian). DOI: 10.18522/2073-6606-2022-20-3-22-38
Acknowledgment: The study was supported by the Russian Science Foundation, project № 22-28-00806, https://rscf.ru/ project/22-28-00806/

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Modeling contractual transactions for the assessment of economic endeavors


TERRA ECONOMICUS, , Vol. 20 (no. 3),

The article is about formalized description of economic agents’ endeavors assessment. Stemming from our previous elaborations, we build a model for contractual transactions. Different stages of a production process are analyzed. We show that transaction costs can be divided on production and non-production ones. This classification is used to assess the endeavors of economics agents. The model we build enables the analysis of different types of production cycles, distinguishing the stages, on which the problems of cooperation and motivation of individuals occur. It also makes possible to elaborate on appropriate enforcement procedures and adequate incentives to enhance the efficiency of coordination between individual agents. Our findings support the versatility of the model, as well as its applicability for agent-based modelling in institutional studies, with various types of coordination in contractual transactions. We suggest a series of further research to develop methods appropriate for selecting the type of contraction, estimating the efficient payments for agents’ efforts, investigating opportunistic behavior and reducing monitoring costs in certain types of contracting, as well as identifying ways to reduce transaction costs.
Citation: Pyzhev I., Tanenkova E. (2022). Modeling contractual transactions for the assessment of economic endeavors. Terra Economicus 20(3), 39–51 (in Russian). DOI: 10.18522/2073-6606-2022- 20-3-39-51

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From realism to utopia: The three versions of the Soviet Union’s first five-year plan


TERRA ECONOMICUS, , Vol. 20 (no. 3),

Planning system in the Soviet Union was an integral part of its command economy. This article deals with the first stage of Soviet-type economic planning. I rely on official documents and literature sources to analyze both statistics and discourses related to first five years of planning. The targets of the Soviet Union’s first fiveyear plan were defined by the need to overcome the economic and military backwardness of the Soviet Union compared with advanced capitalist countries. Also, there was a strong conviction among the leaders of the Soviet system that military conflicts with class opponents and unfriendly countries are inevitable. At the same time, the targets were determined by the crisis of new economic policy, official economic reconstruction program of the Soviet Union from 1921 to 1928. My paper compares the three versions of the first five-year plan. I explain the differences in their overall purposes, macroeconomic goals and target proportions between the industry sectors. Based on international economic history and the history of Soviet Union, I assess the feasibility of several versions of the five-year plan and uncover the utopian nature of the five-year plan finally adopted. Besides, the article analyzes the fulfillment of the five-year plan during the first two years. Alternative macroeconomic estimates confirm that almost all of the most important targets have not been achieved. Tendencies to increase some of the indicators for particular sectors of the economy since spring 1929 are analyzed as well. Due to the utopian nature of the adopted plan, the question is considered whether Stalin and his entourage were insane and how they could navigate in what was happening in the economy when guided by unreliable macroeconomic data. Although, they are proved to have sufficient information about the real situation in the economy.
Citation: Khanin G. (2022). From realism to utopia: The three versions of the Soviet Union’s first fiveyear plan. Terra Economicus 20(3), 52–71 (in Russian). DOI: 10.18522/2073-6606-2022-20-3-52-7

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Technological and regulatory cycles in world economic development: Historical and economic retrospective


TERRA ECONOMICUS, , Vol. 20 (no. 3),

The authors prove that over the last 250 years of the history of capitalism there has been a cyclical change of the dominant mode of world economic relations typically referred to as protectionism – friterism – globalism. Currently, there is a transition from the declining phase of globalism to a new protectionism. We modify the concept of general purpose technology and hypothesize on the regularity of cyclical development of technology. The latter is seen as production – transport – information scheme. The development of production technologies prompts leading countries to introduce protectionism as a means of new industrial base. Advanced production technologies stimulate the development of transport and the establishment of free trade regime in the world economy. The transition to the development of information and communication technologies is stimulated by the need to manage production units scattered around the world, which means the establishment of a globalization regime. Information and communication technologies play a dual role. On the one hand, they prolong the existence of previous production and transportation technologies, and on the other, they create the necessary conditions for the development of new production technologies. The lifetime of each dominant general purpose technology is determined by the period of its profitable application for the purpose of capital accumulation. A complete cycle of development of all technologies, which we propose to call a technological megacycle, takes about 100–120 years. During the same period, the world economy passes the dominant mode of world economic relations cycle. The first technological megacycle occurred from the 1780s to 1914 and ended with the collapse of the first phase of globalization (1870–1914). The second technological megacycle began at times of the Second Industrial Revolution in the early XX century and declined in the 2010s. The unprecedented depth of the current global crisis is determined by the structural shifts resulting from the emergence of the third technological megacycle.
Citation: Tolkachev S., Teplyakov A. (2022). Technological and regulatory cycles in world economic development: Historical and economic retrospective. Terra Economicus 20(3), 72–86 (in Russian). DOI: 10.18522/2073-6606-2022-20-3-72-86
Acknowledgment: Our research is supported by the state assignment of the Financial University

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Bank loans vs debt within social networks: The case of Central Asia


TERRA ECONOMICUS, , Vol. 20 (no. 3),

In the countries of Central Asia, rituals of weddings, funerals and other important events play a significant role. Many complex ceremonies impose a financial burden on households, which is alarming for the authorities, who see the ritual economy as a threat of the citizens’ impoverishment. The reputation of families and the desire to confirm social status in the eyes of relatives, neighbors and friends doom households to conspicuous extravagance. This article uses empirical evidence collected through interviews with the residents of Central Asian countries in 2021–2022. The ritual economy in the countries of Central Asia is a vivid example of social pressure on the financial behavior of families. Spending during the performance of rituals is a kind of self-presentation of households. A significant part of the inhabitants of the Central Asian region is not able to bear the burden of expenses associated with the performance of rituals without borrowing. Even despite the fact that, for example, for weddings they begin to prepare much in advance. However, own savings, as a rule, are not sufficient. The way out is a formal or informal loan. The article describes how debt obligations are organized under a formal agreement with a bank loan or informal borrowing from friends and relatives, and what drives household choice. The expansion of bank lending is driven by two reasons. The first is the attractiveness of bank loans due to the fact that they are not personalized and do not imply a feeling of personal gratitude to those who lend money. The second reason is the growth in defaults on loans from relatives and friends, which causes a reduction in the practice of using social networks as sources of lending. Non-payments of loans indicate a reduction in the ability of the social environment to control the behavior of its members.
Citation: Barsukova S. (2022). Bank loans vs debt within social networks: The case of Central Asia. Terra Economicus 20(3), 87–97 (in Russian). DOI: 10.18522/2073-6606-2022-20-3-87-97
Acknowledgment: This study was supported by the Russian Foundation for Basic Research (project «The increase in expenditure on life-cycle rituals in the Central Asian societies: Social stakes and economic consequences (1980–2020)», № 20-59-22001). The sponsor influenced neither the research design nor the interpretation of the results.

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Unequal investing in the human capital of children (The case of Russia)


TERRA ECONOMICUS, , Vol. 20 (no. 3),

We use RLMS HSE data to assess unequal investments in the human capital of children in Russia. Our analysis shows that the position of households in socio-economic hierarchies by the level of education, professional status, income and subjective positioning differentiates investing in children’s education. The increase in the share of households that invest in the human capital of children occurs while moving from less to more prosperous positions in each of these hierarchies. Between 2013 and 2018, the number of households spending on children’s education increased, but the pandemic caused the situation to reverse, offsetting these results in all but the most affluent groups. In terms of children engagement in additional educational activities (for schoolchildren – apart from school, for preschoolers – in addition to home and family activities), it turns out that children are highly engaged in creative activities, to a lesser extent in sports, and to the least extent in child development courses. At times of the Covid pandemic engagement in sports and creative activities reduced for children from advantaged and less advantaged households. Engagement in development courses proved to be most resilient to this external shock. Children participating in development activities belong to households with high social status, given various axes of social differentiation, but even in these they are a minority. Multilateral engagement of the child, i.e. participation in all three types of additional educational activities, is uncommon, while complete exclusion from any forms of extracurricular or extrafamilial activities is widespread.
Citation: Mareeva S., Slobodenyuk E. (2022). Unequal investing in the human capital of children (The case of Russia). Terra Economicus 20(3), 98–115 (in Russian). DOI: 10.18522/2073-6606-2022-20-3- 98-115
Acknowledgment: The research is supported by the Ministry of Science and Higher Education of the Russian Federation (grant ID 075-15-2022-325).

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Circular economy in the resource supply for regional industrial development


TERRA ECONOMICUS, , Vol. 20 (no. 3),

Unprecedented sanctions against Russia by the collective West has challenged the economic policy of our country, with import substitution and forced industrial development among the key priorities. Supplying resources for regional economies becomes crucial. Circular economy modelling based on the principles of resource conservation and zero waste appears a prominent tool for ensuring rational consumption and striking a suitable balance between the different interests. We adapt a circular economy model to assess the rational use of energy and water resources in Don river basin located in the South of Russia. We argue that Southern Russia represents a case of high relevance due to lack of modern manufacturing machines and up-to-date equipment, as well as the strategic significance of these areas for the whole Russian economy. River flow forecasting revealed available water resources which might be distributed. We also calculated water management balances and assessed the availability of water resources for participants of Don water management complex. Our model takes into account the difference in industries in terms of their technological advancement and therefore allows determining resource intensity parameters in context of possible coalition compromise. This study contributes to existing research since we combine a regional basin approach and a concept of closed-loop economy to deal with statistics on Don river basin.
Citation: Matveeva L., Kosolapova N., Kaplyuk E., Likhatskaia E. (2022). Circular economy in the resource supply for regional industrial development. Terra Economicus 20(3), 116–132 (in Russian). DOI: 10.18522/2073-6606-2022-20-3-116-132
Acknowledgment: The research is supported by the Russian Science Foundation № 22-28-00050, https://rscf.ru/ project/22-28-00050/ at the Southern Federal University.

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Impact of the COVID-19 pandemic on tourism in the Czech Republic


TERRA ECONOMICUS, , Vol. 20 (no. 3),

Our paper aims at scrutinizing and evaluating the impacts of COVID-19 pandemic on international and domestic tourism in the Czech Republic. Our methodology includes the analysis of empirical and statistical data provided by the statistical agencies that stems from the systematic and holistic literature review. The empirical research includes analysis and comparison of time series of economic indicators. The paper evaluates two groups of statistical indicators. The first group consists of domestic and inbound tourism in the Czech Republic. The second area of research is the analysis of the hotel sector in the Prague region. The analysis of the hotel industry focuses on the development of the following internationally used economic indicators: average daily rate, occupancy, and revenue per available room. Our results reveal that there were significant effects of the coronavirus pandemic both on the inbound and the domestic tourism which brought about a plethora of social and economic implications such as the decrease in the average occupancy of hotel rooms or the revenues for the tourism and hospitality sector. As a result of the pandemic, the tourism structure in the Czech Republic has changed significantly with the institutions of tourism undegoing serious transformational and structural changes that might take lots of time to revert and to mitigate by the relevant tourism authorities, stakeholders, and policymakers.
Citation: Tittelbachová Š., Čajková A., Lukáč M., Lžičař P. (2022). Impact of the COVID-19 pandemic on tourism in the Czech Republic. Terra Economicus 20(3), 133–145. DOI: 10.18522/2073-6606- 2022-20-3-133-145
Acknowledgment: The paper is a part of the internal research project VEGA 1/0720/19: Inovačné stratégie v regionálnej politike so zameraním na rozvoj kultúrnych inštitúcií.

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