For many millennia, only the final and initial stages of the reproduction process - the sale of the final product and the purchase of the necessary raw materials and tools-went beyond microeconomic farms. The central link of reproduction - the production process itself-was invariably localized within a particular community, peasant farm, craft workshop, manufactory, factory, factory or mine. It would seem that it cannot be otherwise: after all, this process is inherently tied to a specific geographical location, land plot, production facilities and takes place within a specific labor collective.

However, in the XVII-XIX centuries. first, on the basis of a manufactory, and then a mechanized factory, a fundamentally different type of division of labor emerged - the division of the technological process of manufacturing the final product into separate operations and their distribution among several employees, and later - several machines. This division of the production process has long been confined to a single enterprise or concern. Even Ford's first automobile giant in River Rouge was a single complex. The Detroit Institute of Fine Arts has a hall with four wall paintings by the famous Mexican artist Diego Rivera. On them, in the early 30s of the last century, he displayed the entire production cycle of this Ford brainchild, from steelmaking to stamping cars.

Over time, the division of the production process went beyond individual enterprises, and then beyond national economies, that is, it began to develop not only in the inter-firm, but also in the international economic space. Participants in such a transnational production process, no matter how far they are from each other (in different countries or even on different continents), work in concert on the production of a particular product, working according to a single design and design plan, observing common standards, a given rhythm and other conditions for joint production, as if these two companies were working together. the participants were divisions of the same company.

On this basis, a specific type of international division of labor - the international division of the production process (MRPP) - has also developed. In the world scientific literature, this phenomenon is called differently: outsourcing 1, production fragmentation 2, intermediate trade, vertical specialization 3, slicing the value chain 4, etc.But in any case, it refers to the distribution of technological stages of production of goods or services between producers located in two or more countries. This is how quite extensive network structures of international industrial cooperation are formed, sometimes covering hundreds or even thousands of links.

The development of MCI has far-reaching consequences for world trade as such, for the evolution of economic relations between developed and developing countries, and for reducing the technical, economic, and socio-cultural gap between the North and South of the world community.

FRAGMENTATION OF PRODUCTION AND GROWTH OF INTERNATIONAL TRADE

International trade has long been growing faster than the world's gross domestic product. This is pre-determined by a number

Yuri SHISHKOV, Doctor of Economics, Professor, Chief Researcher of IMEMO RAS.

1 См.: Finestra R., Hordon G. Foreign Investment, Outsourcing and Relative Wages // The Political Economy of Trade Policy: Papers in Honor of Jagdish Bhagwati. Cambridge MA, 1996. P. 89 - 127.

2 См.: Deardorf A. Fragmentation in Simple Trade Models. University of Michigan, 1998. Manuscript.

3 См.: Hummels D., Rapoport D., Kei-Mu Yi. Vertical Specialization and the Changing Nature of World Trade // Federal Reserve Bank of New York Economic Policy Review. June 1998. P. 79 - 99.

4 См.: Krugman P. Growing World Trade: Causes and Consequences. Brookings Papers on Economic Activity. 1995. V. 1. P. 327 - 377.

page 15

Figure 1. Indices of world production of agricultural goods, mineral raw materials and finished products.

objective reasons, which usually include the rapid development of international transport infrastructure, cheaper transportation, the weakening of protectionism and, of course, the rapid deepening of the international division of labor.

A crucial role among these reasons is played by the division of labor, which is constantly evolving in step with technological progress, and sometimes even ahead of it. At first, it was inter-sectoral, with, say, Indian cotton being exchanged for British cotton fabrics. Over time, this division of labor faded into the background, giving way to the leading role of intra-industry, when intermediates of a particular product group are exchanged for finished products of the same group, or within this product group some finished products (for example, cars or televisions) are imported, while others are exported.

The intra-sectoral division of labor takes place primarily and mainly within the framework of the manufacturing industry, which, both in the industrial core of the world economy and on its developing periphery, is growing much faster than agriculture and the extractive industry for technical and technological reasons. From 1950 to 2002, the volume of world production of finished goods (at constant prices) increased 10.1 times, while the output of extractive industries increased 4.2 times, and agriculture-only 3.5 times (see Figure 1). This is due to the fact that the manufacturing industry allows infinite diversification of production into arbitrarily fractional branches and sub-sectors, the budding of which automatically increases the number of intermediates circulating between increasingly narrowly specialized separate industries, both within national farms and in the cross-country space.

Such differentiation of products of manufacturing industries leads to an increase in the number of transactions of purchase and sale of intermediates and final products between their producers and consumers. And since they are sold at full cost (including raw material costs, depreciation, value added, and taxes), the value of goods is invariably greater than the value added in the manufacturing process. Therefore, the growth rate of trade naturally exceeds the growth rate of production. This is quite obvious in the international arena, where trade statistics are much better organized than within countries. Thus, for half a century, from 1950 to 2000, the volume of world exports grew 3.6 times faster than the volume of world commodity production, including in the agricultural and food sector-1.8 times, in the extractive industry-2.7 times, in the manufacturing industry-5 times 5 .

This also determines to a decisive extent the reproductive openness of national economies, measured by the percentage ratio of the value of a country's foreign trade turnover (or separately its exports or imports) to the value of its gross domestic product. Full reproductive openness of the world economy (commodity export + import ratio-

5 Calculated by: WTO. International Trade Statistics 2003. Geneva, 2003. P. 31.

page 16

Table 1. Percentage of world commodity exports to world commodity production (in 1990 prices and exchange rates) 1

1950

1960

1970

1980

1990

2000

Export of goods in general

16.6

21.3

26.1

32.6

39.4

59.9

Manufacturing products

18.5

22.7

30.1

39.4

50.8

81.8

Agricultural products and foodstuffs

23.6

27.5

31.6

35.9

32.3

37.2

Mineral raw materials and fuel

10.5

16.3

18.8

21.6

22.8

29.4

-----

1 To get an idea of full reproductive openness (which also includes imports), the data in this table should be approximately doubled.

Calculated by: UNCTAD. Handbook of International Statistics for the corresponding years; WTO. International Trade Statistics 2003. Geneva, 2003. P. 31.

ta to GDP) increased from 16% in 1950 to 37% in 2000.

However, it should be borne in mind that GDP includes not only net product, depreciation of fixed capital and indirect taxes in the field of commodity production, but also similar components in the service sector. Moreover, this second sector has been growing much faster in recent decades than material production, and its share in the total GDP has been steadily increasing. If in 1970 It accounted for 54.2 % of world GDP, compared to 64.1% in 2001.6 This change in the structure of GDP is due not only to the growing role of various commercial and public services in the life of society, but also to the fact that labor productivity in this area increases more slowly than in material production. Therefore, the cost of labor and capital per unit of output decreases more slowly here, and therefore, all other things being equal, the cost of services produced increases somewhat faster than the cost of goods produced. It is clear that due to such circumstances, measuring the dynamics of the reproductive openness of national economies by correlating the volume of commodity trade alone to GDP leads to an underestimation of this indicator due to an increase in the non-commodity component of gross product.

A more accurate picture of this dynamics is provided by the correlation of foreign trade in goods with products of commodity production at market prices (see Table 1). This method was proposed back in the 70s by P. Khvoynik, who noted that " first, services in the domestic sphere, which make up a significant part of GDP, have nothing to do with second, specific types of services directly in foreign trade (in connection with transportation, insurance, etc.), as well as payments for non-commodity operations and other types of international capital flows are included in the "invisible trade" items of the balance of payments and are not reflected in the statistics of commodity exports"7.

It is characteristic that in the 70s and 90s of the last century, the openness of national economies increased rapidly mainly due to the international exchange of manufacturing products. The degree of openness of the global sphere of material production in terms of exports in the second half of the 20th century increased by 3.6 times, including in terms of exports of agricultural products and foodstuffs - by 1.6 times, mineral raw materials and fuel-by 2.8 times, and manufacturing products - by 4.4 times. And this is natural, since it is in the latter case that the differentiation of production mentioned above and the multiplication of acts of purchase and sale of intermediates on the way from the initial producer to the final consumer most actively occurs.

A growing contribution to this process is made by MRPP on the basis of the so-called vertical specialization of participants in the manufacture of a particular final product. Such specialization develops both within TNCs and between TNCs and independent producers. A study conducted by American economists on the basis of input-output tables for 13 major world exporters (10 leading Western countries, Mexico, South Korea and Taiwan, which account for 3/5 of world trade), showed that by 1990, more than 21% of their total exports were associated with international vertical specialization. Moreover, such commodity flows have increased by almost 30% since 1970, accounting for about 1/3 of the total increase in exports of these countries .8

MCI occurs in various manufacturing industries, but most of all in those that are included in Group 7.

6 Calculated by: UNCTAD. Handbook of Statistics for the corresponding years.

Khvoynik P. I. 7 Mezhdunarodnaya kapitalisticheskaya torgovaya [International Capitalist Trade], Moscow, 1977, pp. 62-63.

8 См.: Hummels D., Ishii J., Yi K. M. The Nature and Growth of Vertical Specialization in World Trade // Journal of International Economics. 2001. N 54. P. 77.

page 17

Table 2. Share of parts and components in exports and imports of mechanical engineering products by 28 countries in Western Europe, North America and East Asia 1 , %

Product subgroups of Section 7 of the MSTC

1985

1996

export

import

export

import

Electric generators (71)

46.0

37.4

41.3

29.2

Special machines (72)

24.7

22.2

22.4

20.3

Metalworking companies (73)

19.5

18.1

20.0

19.0

General prom. equipment (74)

15.8

12.9

16.7

16.8

Office equipment (75)

38.3

37.3

37.6

36.1

Telecommunications (76)

50.5

44.9

65.9

64.4

Electronic equipment (77)

25.7

26.0

22.1

22.3

Cars (78)

27.9

28.7

29.4

29.9

Other vehicles (79)

22.8

26.9

28.5

35.6

Miscellaneous finished products (8)

2.3

1.8

3.1

3.2

Total

23.2

22.0

30.6

23.4

-----

1 Austria, Belgium, Canada, China, Denmark, Finland, France, Germany, Hong Kong, Indonesia, Ireland, Italy, Japan, South Korea, Malaysia, Mexico, Netherlands, Norway, Philippines, Portugal, Singapore, Spain, Sweden, Switzerland, Thailand, Taiwan, United Kingdom, United States.

Calculated by: Ng F., Yeats A. Production Sharing in East Asia. The World Bank. Wach., 1999. Policy Research Working Paper N 2197. P. 10, 47.

standard trade classification (cars and vehicles). Until the second revision of the MCC in 1967, it was not possible to statistically track the dynamics of such trade, since the previous classification (at a five-digit level) identified only about 800 goods, of which only 10 were components of the final product. It is only in recent years, when many countries have adopted a more detailed classification9 , which has expanded the number of intermediate product items to 200, that studies based on a solid quantitative analysis of the MRPP10 have emerged . However, even now the allocation of parts and components concerns only two large product groups: "machinery and means of transport "and" furniture", leaving a significant part of other finished products, in particular chemical products, in the shade.

However, today the share of cars and vehicles accounts for 42% of the total world trade and 56% of the world trade in finished products. Therefore, the data on MCI in this industry is quite revealing. An analysis of the foreign trade of 28 leading countries-exporters and importers of machinery and vehicles-showed that from 1985 to 1996, exports of finished products of commodity group 7 (excluding parts and components) increased 2.5 times, imports-4.1 times, while exports of parts and components within this commodity group for the same period it increased by 3.7 times, and imports-by 4.2 times. Accordingly, the share of parts and components in the total volume of exports and imports of cars and vehicles increased (see Table 2).

International trade in those products of the manufacturing industry, the production of which is characterized by a high level of MCI, is developing much more actively than the rest. Thus, from 1990 to 2000, the average annual growth (in current prices) of world commodity exports as a whole amounted to 6.4%, while exports of manufacturing products, where this level is higher than average, grew by 7% per year, including machinery and vehicles-by 8%, including office and telecommunications equipment - by 12.4%11 . Compare the last figure with the proportion of parts and components in subgroups 75 and 76 (Table 1). 2), and the reason for this faster growth will become obvious.

Thus, the rapid development of the international exchange of intermediates, primarily parts and components of finished products, accelerates the growth of international trade, which is faster than the pace of the previous year.

9 Most developing countries did not adopt the new MCC until the first half of the 1980s, which precludes a longer-term retrospective study of this phenomenon.

10 See in particular: Yeats A. Just How Big is Global Production Sharing? The World Bank. Wash., 1998. Policy Research Working Paper N 1871; Ng F., Yeats A. Production Sharing in East Asia. The World Bank. Wash., 1999. N 2197; Fragmentation and International Trade. Oxford and N. Y., 2000; Kaminski B., Ng F. Trade and Production Fragmentation: Central European Economies in European Union Networks of Production and Marketing. The World Bank. Wash., 2001. N 2611.

11 Calculated by: WTO. International Trade Statistics 1993. Geneva, 1993. Tabl. A 7; Geneva, 2003. Tabl. A 8.

page 18

growth of material production. This, in turn, increases the degree of reproductive openness of national economies and increases their interdependence. Thus, the share of intermediates imported to England from abroad in the total mass of intermediates used in its manufacturing industry increased from 13.4% in 1974 to 21.6% in 1993, including in electrical engineering-from 14.9% to 34.6%, and in the production of vehicles - from 14.3% to 32.2%12 . The world is gradually being covered by an increasingly dense network of production and cooperation ties, drawing all countries into the global reproduction system. Through the channels of this network, flows of semi-finished products, parts, components and finished products continuously circulate. At the same time, the share of intermediate products in such flows is steadily increasing.

DIVISION OF THE PRODUCTION PROCESS BETWEEN DEVELOPED AND LESS DEVELOPED COUNTRIES

The initial driving force of the MCI is the same as that of the international division of labor in general-reducing the relative costs of labor and capital per unit of product produced and thereby increasing the price competitiveness of this product. Labor costs and capital costs are closely interrelated. To reduce labor costs, you can introduce more productive equipment, up to automatic, almost completely replacing live labor. But for the entrepreneur, it is not this displacement itself that is important, but the reduction in the cost of a unit of production. If high-performance equipment costs more or at least as much as it can save on paying the staff it displaces, then such a modification makes no sense. The costs of labor and capital are also interrelated in another way: the more complex the production technology of a particular product or its component, the more skilled the living labor that ensures such a production process must be. But the higher the qualification of labor, the more expensive it is. Thus, any manager constantly has to look for the optimal ratio of payment for live labor and the cost of equipment (more precisely, the part of its cost that is transferred per unit of product in the production process). And to do this in conditions of steadily increasing technological complexity of production and, accordingly, increasing remuneration of service personnel.

This task is made easier by the fact that the production of a particular end product includes many stages, some of which are low-tech and do not require skilled labor, some are medium - tech and involve intermediate - skilled workers, and some are high-tech and involve highly qualified personnel. This makes it possible to find the optimal solution for individual stages (primarily labor-intensive and low-tech ones) not by further displacing live labor, but by displacing these production stages themselves outside the country, where labor of a similar skill level is significantly cheaper. The difference in costs for this item in different countries is quite significant. Thus, in 1990-1994, the average monthly labor costs in the manufacturing industry in Japan were $ 1,795 per employee, in South Korea - $ 1,318, in the Philippines - $ 205, and in Indonesia - $ 84.13 So the choice is very wide in this respect.

However, it is rather strictly limited by an important condition-the qualification of the local labor force. It should correspond to the level of technology intensity and complexity of the specific operation that is being carried out abroad. This can be the manufacture of a part of the final product, or a relatively simple assembly of the latter from parts and components manufactured in more developed countries. Therefore, in each specific case, either the production of certain parts or the assembly of the finished product is carried out abroad. As can be seen from Table 2, the MCI is a two-way road: the shares of parts and components in the import and export of the 28 countries studied are quite close in many subgroups.

A more detailed analysis based on the so-called visible comparative advantages14 shows that developed countries with relatively expensive labor tend to specialize in the production and export of parts and components.-

12 See: Campa J., Goldberg L. The Evolving External Orientation of Manufacturing Industries. NBER Working Papers. 1997. N 5958.

13 См.: World Development Indicators 1999. Wash., 1999. Tabl. 2.6.

14 The index of visible comparative advantages (RCA) is calculated by the formula: RCA ij = [x ij /X j ]/[x wj /X w ] x 100, where x ij is the value of the export of goods i by country j ; x wj is the value of world exports of the same product; X j - the value of all exports by country i ; X w - the value of all world exports. If the index exceeds 1, the country is considered to have a competitive advantage in the production and export of product i , if it is equal to 1, then it does not have it, and if it is less than 1, then the export of such goods is unprofitable.

page 19

Table 3. Share of parts and components of mechanical engineering products that have comparative advantages, % of the total number of product items of parts and components

Countries

Production and export operations

Import and assembly operations

Advantage ratio 1

1985

1996

1985

1996

1985

1996

USA

58.3

66.7

16.7

16.7

0.29

0.25

Japan

21.7

25.7

25.0

13.4

1.15

0.52

Taiwan

15.0

31.7

16.7

16.7

1.11

0.53

Hong Kong

16.7

21.7

28.3

23.3

1.69

1.07

Singapore

25.0

26.7

36.7

41.7

1.46

1.56

Malaysia

20.0

20.0

46.7

45.0

2.34

2.25

Thailand

10.0

20.0

36.7

45.0

3.67

2.25

Philippines

10.0

13.3

66.7

31.7

6.67

2.38

China

6.7

8.3

36.7

26.7

5.47

3.22

South Korea

0.0

10.0

25.7

40.0

4.00

Mexico

18.3

16.7

70.0

70.0

3.83

4.19

Indonesia

0.0

6.7

63.3

50.0

7.46

-----

1 Ratio of import and assembly operations to production and export operations (in times). Source: Ng F., Yeats A. Production Sharing in East Asia. P. 32.

less developed countries, where labor is cheaper, focus on assembling final products from imported parts. As can be seen from Table 3, the share of parts for which the United States, Japan, and Taiwan had visible competitive advantages in production and export in 1996 was two or more times higher than the share of those for which these countries had advantages in importing and assembling the final product. Leading manufacturers of cars and vehicles have become even more profitable to specialize in the manufacture of high-tech and high-quality parts and components, transferring many simple assembly operations to their partners in less developed countries. In other countries, on the contrary, the balance is still tilted in favor of import and assembly operations. In 1996, China's share of such operations outweighed that of export operations by 3.2 times, South Korea's by 4 times, Mexico's by 4.2 times, and Indonesia's even by 7.5 times.

However, it is not difficult to see that even less developed countries have been able to expand the share of parts and components for which they have gained a comparative advantage as producers and exporters in 11 years. In Hong Kong and the Philippines, it has increased by 1/3, in Thailand-twice, and South Korea and Indonesia generally started from scratch in 1985 and brought it to 10 and 6.7%, respectively. As a result, all developing countries (except Mexico and Singapore) have shifted their apparent competitive advantages in favor of manufacturing and exporting parts and components. In other words, they are somewhat closer to the United States, Japan, and Taiwan in this regard. If, for example, the Philippines in 1985 lagged behind Japan in the ratio of advantages by 5.8 times, then in 1996-by 4.6 times. This is a natural process of technical and economic "maturation" of developing countries as industrial technologies spread across the planet.

There are three main channels of such spreading. The first is the import of high-tech intermediates that are not produced in the importing country, in order to improve the quality of the final products made from them. Over time, the importing country may learn to produce such high-quality intermediates on its own. The second channel is the purchase and sale of licenses. However, it is associated with the risk of undermining the market position of the license seller. Therefore, TNCs prefer to sell their outdated technologies, and use the latest ones only in their foreign branches. Statistics show that transactions between parent companies and their subsidiaries account for more than 80% of all international technology transactions15 . The third and most important channel of technology transfer from more developed countries to less developed ones is direct investment of the former in the economy of the latter in the form of joint ventures. A huge role in this spreading is played by the deployment of-

15 См.: Foreign Direct Investment for Development. OECD. Paris, 2002. P. 97.

page 20

multinational corporations have established their own production networks around the world.

A good example is the leading manufacturer of semiconductors, the American company Intel, which accounts for a quarter of the world's research and development in this area and the same part of global sales of these components of electronic equipment. It is constantly increasing its market potential by investing in more and more new businesses in different countries. In 2001 alone, its investment totaled $ 7.3 billion. The most capital-intensive stages of semiconductor manufacturing (manufacturing of silicon boards and their filling) are carried out mainly in the United States, while more labor-intensive assembly and testing operations are carried out in countries with relatively cheap labor. Of the 13 companies that manufacture semiconductors and other computer components, nine are located in seven cities in the United States, two in Israel, and one each in Ireland and Malaysia. Of the 11 assembly plants, three are located in Malaysia, two each in the Philippines, China and Costa Rica. By the end of 2001, all of these enterprises employed 86.2 thousand people, of which about 2/3 were in the United States, 11% in Malaysia, 8% in the Philippines, 4% in Ireland, 3% in Israel, 2% in Costa Rica, and 1% in China16 .

Similarly, other TNCs operate in this area: Toshiba, Motorola, Hitachi, Infenion, Philips, Samsung, etc. As a result of the activities of these TNCs, the recipient countries of their subsidiaries have significantly increased their share in the global semiconductor market. In Taiwan by 2000. it increased to 10.6%, China-to 8.8%, Malaysia-to 7.8%, South Korea - to 3.2%, etc. In general, the share of eight countries in this group in the world market (including, in addition, the Philippines, Thailand, Ireland and Costa Rica) increased from 7% in 1985. The total share of developed countries (USA, Japan, England, Germany, France, Italy) and Hong Kong declined from 73% to 38.9% in the same period17 . So the production of semiconductors gradually flows from the countries of the world's scientific and technological vanguard to the less developed countries of the second echelon.

The same processes occur in other branches of the manufacturing industry. At the same time, large corporations are increasingly using contractual forms of interaction with enterprises that are not part of the system of this TNK in order to obtain cheaper imported parts and components. Thus, the global market for contract manufacturing links in the electronics industry has expanded in four years from $ 58 billion in 1998 to $ 139 billion in 2002, or 2.4 times 18. This means that MRPP networks are increasingly expanding beyond individual TNCs, forming truly global production systems. As a result, the manufacturing process of the final product relies almost entirely on outsourcing, that is, on the supply of cheaper parts and components from the outside. "This increases the scale and importance of such supply, as global value chains are being cut into ever - thinner links of specialized functional and geographical components," note the experts of UNCTAD 19 .

This division of the technological process into increasingly fragmented stages and the placement of the latter in different regions of the world opens up new opportunities for less developed countries, which were not known in the past, to join scientific and technological progress. Of course, such an introduction begins with the simplest labor-intensive operations. But we should not forget that such operations are not independent, but are integrated into a single production process and therefore subject to the most stringent technological discipline in terms of compliance with quality standards, delivery times and many other requirements that meet the world level of competitiveness of this finished product. By reducing production costs, the parent company cannot compromise the quality of its products, otherwise it will immediately be squeezed out by competitors, and its trademark will be irreparably damaged.

All this forces suppliers of parts, components or final products assembled by them to resolutely catch up to the level of world standards. For this purpose, in a less developed country (often with the help of the parent company), various kinds of industrial training, skill schools, etc. are organized. Some of the staff is trained abroad at the enterprises of the parent company itself. Management personnel are recruited mainly from people who have received higher education in universities in developed countries. Over time, and by historical standards, quite quickly, the general qualifications of local personnel and the level of their production culture increase so much that it becomes possible to move on to mastering more complex stages of the production process, for example, from assembling computers to manufacturing components of this electronic equipment or, conversely, from manufacturing relatively simple parts and components.

16 См.: World Investment Report 2002. Geneva, 2002. P. 126 - 127.

17 See: Ibid. P. 128.

18 See: Ibid. P. 139.

19 Ibid. P. 141.

page 21

Table 4. US trade in automotive products with Brazil and China, USD million

Year

Brazil

China

importing parts

exporting parts

import of cars

importing parts

exporting parts

import of cars

1997

1223

613

1

795

311

1

1998

1240

954

2

1037

132

2

1999

1360

454

2

1284

251

1

2000

1248

401

167

1635

225

2

2001

955

444

625

1758

258

3

2002

1275

454

622

2242

344

8

2003

1474

480

546

2788

510

19

-----

Источник: US. Automotive Trade, 1997 - 2003, on the base of US. Bureau of Census. 20.01.2004.

Table 5. Leading South-East Asian TNCs in the field of electronics, 2001

Name of a TNC

Home country

Assets

Busyness

total, USD million

including abroad, %

total, people

including abroad, %

Samsung Electronics

South Korea

41692

9.2

73682

32.5

Flextronics International

Singapore

4115

72.5

70000

72.5

First Pacific Company

Hong Kong

2046

98.1

48046

99.9

LG Electronics

South Korea

20304

56.9

42512

49.4

Singtel

Singapore

19108

81.6

21535

81.6

Advanced Semiconductor Engineering

Taiwan

3038

24.0

15681

31.0

Taiwan Semiconductor Manufacturing

Taiwan

10446

19.5

13669

Delta Electronics

Taiwan

1510

51.3

11480

51.2

United Microelectronic Corporation

Taiwan

9140

16.0

8543

11.8

Acer

Taiwan

3344

50.4

4480

50.4

Samsung Corporation

South Korea

9400

29.8

4164

-----

Source: World Investment Report 2003. Geneva, 2003. P. 189 - 190.

components for the production of high-tech finished products.

This trend can be clearly traced, for example, in the development of the exchange of automotive products between the United States and two less developed countries (see Table 4). At first, American automobile TNCs moved there the production of parts and components, which were partly imported to the United States and partly supplied to third countries. Then Brazil and China build their own cars, which are so competitive that they are successfully sold in the United States itself.

Gradually, a less developed country creates its own production, enters the world market, pushes competitors from countries with relatively more expensive labor there, as shown above, and increases its level of export and other income. Along with them, the general well-being of the population is also growing, and consequently, the level of remuneration in the industry from which the connection to the international system of production of this final product began. And history repeats itself: the search for partners begins in the countries of the next echelon in terms of remuneration. Some simple operations are performed there, etc. This can easily be seen from the example of the same East Asian countries, which by the beginning of this century already had their own TNCs in the same electronics industry (see Table. 5) and set up branches in less developed countries.

RUSSIA IN THE SYSTEM OF INTERNATIONAL DIVISION OF PRODUCTION PROCESSES

In the context of the transition to the market and the weakening of the previous strict protectionism, it is uncompetitive-

page 22

The able-bodied Russian civil engineering industry began to rapidly lose sales markets and curtail production. As can be seen in Figure 2, Russia imports much more cars and vehicles than it exports. The average annual excess of imports of these products over exports in 1992-1994 was threefold, in 1995-1998 it was 2.5 times, in 1999-2003 - 2.2 times. This means that we are among the countries that lag behind in terms of machine-building development and are significantly dependent on imports of machinery and equipment from more developed countries.

In such conditions, Russia, like other similar countries, is doomed to implement a strategy of import substitution, that is, to modernize domestic engineering, protecting it with protectionist barriers. Such protection of, say, the Russian automobile industry is well known. But successful modernization is impossible without an influx of advanced technologies and high-quality parts and components from outside. The closed nature of the Soviet economy and the specifics of its non-market organization significantly limited this possibility. Therefore, the new Russia's involvement in the MCI is 2-3 times weaker than that of the leading Western countries or new industrial countries (see Table 6). This gap has not yet been overcome: in 2002, the share of parts and components in Russian exports of cars and vehicles was 17.5%, while in imports it decreased to 6.3%.

To reach the level of technically advanced countries in the key manufacturing industry - mechanical engineering, Russia needs to be more actively involved in the MCI as both an importer of parts and components and their exporter. The current position of our country in the MCI system is determined by its intermediate place in the global technological pyramid. Remaining at the forefront in the field of military equipment, we are significantly behind the leading Western powers in terms of the technical level of our civilian industries. At the same time, Russia is technologically much more advanced than most other CIS countries, Central and Eastern Europe, and the developing countries of the South. In this situation, our interaction with the world's technological vanguard differs significantly from cooperation with countries that are less industrially developed than Russia.

In relation to avangard, we act as an importer of high-quality parts and components of cars and vehicles, not to mention the latest technologies. At the same time, we supply these countries with parts and components that we can produce at an acceptable level of quality with relatively lower labor costs. Such deliveries are often organized with the assistance of Western importing companies themselves, including in the form of equipping Russian enterprises with modern equipment and improving the skills of Russian personnel. In relation to the second group of countries, Russia itself acts as a supplier of parts and components of relatively high quality and as an importer of those intermediate machine-building products that cost it less than those produced at home.

This determines the geographical structure and dynamics of Russian trade in machine and vehicle parts and components. The main suppliers of intermediates for Russian machine builders are the countries of Western Europe, primarily Germany, Italy, France, Finland and the United Kingdom, as well as the United States and Japan (see Table 7). Already in 1994 (there are no earlier comparable customs statistics), 82.7% of parts and components were imported by Russian machine builders from more developed countries, mainly to improve the quality of finished products produced in the country,

Figure 2. Dynamics of production, import and export of machinery and equipment in Russia.

Table 6. Share of parts and components in exports and imports of machinery and vehicles in some countries in 1995, %

Countries

In export

In import

USA

39.8

26.5

Great Britain

32.6

34.6

Germany

27.6

31.2

China

28.8

29.7

Philippines

29.7

33.9

Mexico

24.9

36.3

Malaysia

25.9

23.6

Russia (1994)

15.6

11.0

-----

Источники: Yeats A. Just How Big is Global Production Sharing? The World Bank. Wash., 1998. Policy Research Working Paper N 1871. P. 9, 29; for Russia-the author's calculations based on the customs statistics of the Russian Federation.

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Table 7. Russia's foreign trade in machine and vehicle parts and components

Trading Partners

Import

Export

volume, mln USD

change, %

geographical structure

volume, mln USD

change, %

geographical structure

1994

2002

1994

2002

1994

2002

1994

2002

Far abroad countries

1622.4

1214.3

-25.2

82.7

85.9

470.1

961.2

+104.5

53.6

65.1

European Union-15

988.3

614.9

-37.8

48.9

43.8

53.2

199.7

+275.6

15.1

13.5

Germany

391.6

297.8

-24.0

20.0

21.1

23.3

44.4

+90.4

2.7

3.0

Italy

99.7

73.4

-26.4

9.1

5.2

3.5

6.8

+94.1

0.4

0.5

France

53.8

73.9

+37.3

2.7

5.2

4.3

18.2

+320.1

0.5

1.2

Finland

93.4

62.4

-33.2

4.8

4.4

6.6

29.5

+347.8

0.8

2.0

England

63.4

38.9

-38.6

3.1

2.8

3.9

4.4

+12.0

0.4

0.3

Netherlands

84.5

8.7

-89.7

4.3

0.6

0.9

32.6

+3396

0.1

2.2

USA

128.4

118.8

-7.4

7.9

8.4

5.2

14.5

+177.7

0.6

1.0

Japan

111.0

52.1

-53.9

5.8

3.7

0.4

4.1

+840.9

0.1

0.3

Central and Eastern Europe

241.7

151.8

-37.2

12.3

10.7

66.6

341.3

+412.4

7.6

23.1

CIS countries

338.8

189.8

-41.0

17.3

14.1

404.8

516.0

+26.9

46.4

34.9

Ukraine

209.7

178.6

-14.8

10.7

12.6

199.6

381.4

+91.1

22.8

25.8

Belarus

93.6

4.8

81.9

9.3

Generally

1961.2

1414.1

-27.9

100.0

100.0

876.9

1477.3

+68.5

100.0

100.0

-----

Calculated from: Customs statistics of Foreign Trade of the Russian Federation, Moscow, 1995, 2003.

and only 17.3% were bought in the old-fashioned way in the "fraternal countries" of the CIS. This proportion was formed, of course, not in the third year of market reforms, but long before that, back in the era of the Soviet economy. And this geography of outsourcing is due not to the fact that parts and components are cheaper than domestic ones in the West, but to the fact that they are much better quality, or are not produced in Russia at all. Here, the logic of outsourcing is quite different from that of advanced industrial countries, which move individual links in production chains to places where labor costs are lower.

After eight years, imports of intermediate products for the Russian engineering industry have decreased (at current prices) by almost 28%. One of the visible reasons for this is the undervalued exchange rate of the ruble against major world currencies after the default of 1998, as a result of which the import of all goods has significantly increased in price and become unprofitable. However, the main reason, apparently, is to establish, not without the help of foreign investors, their own production of the necessary parts and components of the right quality. This is clearly seen in the example of the automotive industry. In recent years, Western auto giants have begun to set up assembly plants in Russia.

In the summer of 2002, Ford launched a Ford Focus assembly line near St. Petersburg, which currently consists of 95% imported components. However, the announced price of this car - $ 10.5 thousand-is significantly lower than that of imported cars of the same model. In the future, it is planned to work with local component manufacturers to develop their potential as suppliers for this enterprise. In Togliatti, General Motors created a joint venture with AvtoVAZ and in September 2002 began to produce a relatively inexpensive Chevrolet Niva. Components for it are supplied by two hundred Russian manufacturers, who are doing everything possible to modernize their production technology and improve the quality of their products. The share of local components is more than 40%, and is expected to increase to 96% in the future. In 2004-2005, plants of Renault, Kia, Honda and other 20 companies will start operating .

Moreover, a number of Western companies create enterprises for the production of parts and components in our country. Bosch in cooperation with the Russian

20 См.: US. Department of Commerce Automotive Components Business Development Mission to Russia. BISNIS Automotive. 14.02.2003. P. 2 - 3; Russian Automotive Industry Newsletter. 06.01.2004.

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The company has established the production of spark plugs in Saratov, and Leer, together with GAZ, makes car seats in Nizhny Novgorod. And in its suburbs, Ingersoll Rand produces electrical appliances and steering columns that are supplied not only to Russian entrepreneurs, but also for export, including Mercedes. The list of such examples is far from exhaustive.

It is not surprising that the import of parts and components is gradually being replaced by their production in Russia. It should be noted that their imports from the CIS and CEE countries decreased the most. The share of these two groups of suppliers in the total volume of imports of intermediates fell from 30 to 15%. As a result, the share of suppliers from developed and newly industrialized countries increased from 70.4% to 75.2%. And this is natural: as the Russian engineering industry recovers, it optimizes the choice of suppliers in order to improve the quality of its finished products. This shift towards technologically advanced countries is likely to continue, although some parts and components are still cheaper to buy from less developed countries.

On the contrary, exports of machine-building intermediates from Russia increased by almost 69% over the past six years, including to the European Union countries - by almost 3.8 times, to CEE countries-by more than 5 times, and to Japan - by 9.4 times. Of course, the currency factor mentioned above played a certain role in this jump in exports. But the main thing, apparently, is that over the years the quality level of Russian parts and components has increased, which has provided them with growing sales markets abroad. It is noteworthy that the share of other CIS countries in Russian exports of such intermediate products also fell by 11.5 percentage points, although it still remains the largest. In this regard, Russia is gradually shifting its focus to partners from far abroad, primarily the CEE and EU countries.

Overall, there has been a marked shift in the nature of Russian participation in the MRPP over the past eight years, which are available for statistical analysis. If in 1994 the cost volume of import of parts and components to Russia exceeded the volume of their export by 2.2 times, then in 2002 imports accounted for only 96% of exports. At the same time, the import/export ratio decreased from 3.2 to 2.4 times in exchange with more developed countries, from 0.8 to 0.4 times in exchange with CIS countries, and from 3.6 to 0.5 times with CEE countries. This means that Russia's mechanical engineering industry, although smaller, is still highly dependent on imports of high-quality parts and components from Western countries. At the same time, Russia is becoming a supplier of such intermediate products to both developed and less developed CEE and CIS countries, not only because of the relative cheapness of our products, but also because of their improved quality.

Both, in the long run, contribute to bringing Russia up to the level of the leading machine-building powers. But we still have a long way to go to reach this milestone, overcoming many obstacles, including the fuel and raw materials skew in the structure of our production and exports, which, among other things, diverts foreign direct investment from Russian engineering.

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