International Dimension in the Performance of the Russian Shipbuilding Cluster.
For centuries, the life of the human race has been deeply connected with the sea. From an economic point of view, maritime activities have substantially contributed to the growth and development of many states globally, particularly by providing the opportunity to establish and expand trade relations with other economies. In the last century, because of internationalization and technological progress, among other reasons, the number of these countries has increased. According to a declaration of the League of Nations, subsequently affirmed at least twice by the United Nations, even countries with no direct access to the sea gained the right to have a commercial fleet under their national flags. At present, Austria, Mongolia, Switzerland, Paraguay, the Czech Republic, and some others use this right to their benefit.
What about Russia? In a recent article, George Friedman compared Russia with Western Europe, arguing that the former, in contrast to the latter, "is essentially landlocked. The ports on the Arctic Ocean are frequently frozen, and the ports on the Black Sea and Baltic Sea could have their access to the ocean blocked by enemies that control narrow straits. All of these ports are distant from most of Russia." (2) This observation contains a large measure of truth. Nevertheless, at least from the time of Peter the Great, Russia has tried hard to find an adequate solution to its relative remoteness from the major sea routes. In many cases, the country definitely succeeded. Modern Russian shipbuilding, maritime transportation, ports and harbors, and other components of the so-called maritime cluster that have partly recovered from a deep crisis in the 1990s are facing "a new edition" of the traditional challenge. A variety of factors, including fast-growing demand for Arctic hydrocarbon and other natural resources, the opportunity of establishing a transit route for Western Europe-Eastern Asia trade, and legitimate national ambitions to regain and secure great power status, have doubled the urgency of addressing this challenge.
One of the few things that economists generally agree upon is the ultimate "win-win" nature of international commercial transactions. Furthermore, worldwide experience provides evidence sufficient to support the claim that international trade, in general, and export, in particular, substantially contributes to the growth of industries and enhances the competitiveness of their products. This appears to be twice as true nowadays given the quantitative and qualitative expansion of internationalization and globalization, which exposes economic agents to a variety of new challenges. In the present paper, we aim to evaluate the extent to which the Russian shipbuilding industry as a key component of the national maritime cluster fits the aforementioned propositions. We begin by assessing the state of the art in the industry under review. Then, the discussion moves to the issue of international trade in shipbuilding products and Russia's participation in that process. We try to investigate whether the export orientation of Russian shipbuilding with its focus on the high-tech niches of specialized civilian marine vessels and warships (a) has a good chance of success and (b) is capable of making a substantially contributiion to the steady and robust growth of the industry. The paper is structured as follows. Section 2 deals with the theoretical and methodological background of the analysis. Section 3 examines some key features of the Russian shipbuilding industry. Section 4 elaborates on Russian performance in the global shipbuilding market. Section 5 presents a summary of the key findings and the resulting conclusions.
2. Theoretical Background and Methodology
The subject matter of this present study is situated at the crossroads of several scientific perspectives, namely, the theory of clusters, international economics (in particular, trade theory), international business studies, and Russian/Soviet studies.
The modern shipbuilding industry has clearly defined features such as expensive large-scale fundamental and applied research, a long manufacturing cycle, and high production costs. The most appropriate method for organizing such a high-tech business seems to be the cluster approach. Economists and specialists in related fields have studied the phenomenon of clusters for many years.
Classic industrial district models define the modern perception of clusters. Subsequently, given the current economic realities, Sebastiano Brusco, (3) Paul Krugman and Antony Venables, (4) Michael Porter, (5) and Joseph Cortright (6) have elaborated the following widely accepted definition:
Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g., universities, standards agencies, trade associations) in a particular field that compete but also cooperate. Clusters, or critical masses of unusual competitive success in particular business areas, are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more advanced nations. (7)
Some researchers tended to highlight actual business issues that are somewhat neglected in this definition, assuming the shipbuilding industry needs organizational solutions for intraindustry cooperation. In particular, Michael Storper focuses on external economies of scope, which have not only made it possible to increase the production of individual firms but have also had a similar effect on the system as a whole, based on the multiple interconnections among its units. (8) Moreover, Theo Roelandt and Pim den Hertog (9) emphasize the importance of interaction for knowledge creation and diffusion at the regional level. Modern regional innovation systems put knowledge rather than the firm at the center of the cluster.
Given the fact that the global totality of shipbuilding clusters includes different specific entities, the problem of their classification has clear theoretical and practical significance. In particular, an initial typology that seems to be quite relevant for the Russian shipbuilding industry distinguishes between the more science-based clusters and the more traditional industry clusters. Using a multicriteria approach, Michael Enright (10) classifies the clusters into some general types based on either spatial characteristics and inter-firm linkages or both. Meanwhile, Ann Markusen (11) believes that the most suitable spatial pattern for industries like shipbuilding is a "sticky place." According to her, the maritime cluster should be defined as a satellite platform type characterized by the branch facilities of externally based multiplant firms. The plants are large and relatively independent. Minimal trade or networking takes place among the clusters' branch plants, and the incidence of spin-off activities (entrepreneurship and suppliers) is relatively small.
Expansion of this perspective toward transport, logistics, and urban studies, including national environment and policy issues, leads to a "new wave" of academic interest in the clusters. Thus, David Doloreux (12) believes that the modern renaissance of the cluster approach in the maritime sector results in a focus on economic competitiveness policies promoted by both firms and national regulators. He particularly finds prospects for maritime clusters in the "industrial complex" (including shipbuilding). Some interesting solutions are proposed for trade relations analysis. Thus, Wei Zhang and Siu Lam (13) apply the Lotka-Volterra equations for explaining the interactions within different sectors of the maritime cluster. Moreover, Ioannis Koliousis et al. (14) underline the international dimension of the maritime heritage "region-specific hue" that led to the paradox of the sectors. Scarcity paradox model is used to take into account the spatial boundaries of regions. Doloreux and Richard Shearmur (15) examine the national factors in the development of maritime industries.
As for international economics, one could sensibly argue that for centuries, the majority of mainstream economists tended to believe in the benefits that international trade--assuming certain necessary preconditions--generated for companies, industries, and countries participating in the process as importers, and double the benefits as exporters. Today, this perception is widely reflected in books and articles written by leading academics (16) and in flagship reports issued by international economic organizations (World Trade Organization [WTO], United Nations Conference on Trade and Development [UNCTAD]). The ideas that are largely specifically relevant to the international trade in shipbuilding products originate from the well-known classical approaches of Ricardo and Heckscher-Ohlin. New trade theories (17) are useful for a deeper understanding of the nature of interregional/international trade in the case of monopolistic competition and increasing returns to scale. Paul Krugman focuses on intraindustry trade. Furthermore, Elhanan Helpman and Krugman (18) provide their interpretation of imperfect competition and performance on the part of multinational corporations, and suggest a new vision of international economic cooperation, in general, and intraindustry trade, in particular.
The paradigm of international business studies has the potential to assist in dealing with the peculiarities of the manufacturing process for semi-finished and finished goods in the shipbuilding industry. These goods require special strategic decisions. One option might be a relatively deep specialization on selected groups of products. Michael Porter's positioning approach is useful as a starting point in this case. Porter (19) believes that a firm can survive only if it can establish a difference it can keep. He highlights three origins of strategic positions that emerge from distinct sources: variety-based, needs-based, and access-based positioning. Porter emphasizes that the sources are not mutually exclusive and often overlap. As for shipbuilding enterprises, variety-based positioning seems to be the most appropriate because it is based on producing a subset of an industry's products or services. This type of positioning makes economic sense when a company can achieve excellence in selected products or services using distinctive sets of activities.
Shipbuilding companies focusing on variety-based positioning tend to go outside the domestic market. Concurrently, the foreign market entry of shipbuilding companies does not guarantee profitability. Mats Forsgren (20) suggests a contemporary revision of the classical internationalization process model. He critically examines the approach of Jan Johanson and Jan-Erik Vahlne, (21) incorporating business networking and entrepreneurship theory into the model. Thus, he calls into question the possibility of optimizing operational results and implementing a long-term strategy simultaneously.
It is commonly accepted that innovative factors play a remarkable role in modern shipbuilding. Under the circumstances, the discussion on international new ventures (INVs) provides yet another argument in favor of specialization. In particular, Jean-Francois Hennart (22) argues that INVs tend to sell distinctive niche products to spatially dispersed customers because of their business model, thereby reducing transaction costs and expenditures on adaptation.
For Russian/Soviet studies, we stick to the traditional idea used to reveal special features of the national economy. The point is that the political factor, which is the active and intensive involvement of the state, has always been highly significant in defining certain basic trends of Russian economic development. (23) Despite the radical transformation experienced by the country since the early 1990s, it can reasonably be argued that modern Russia largely inherited this peculiarity from its historical predecessor--the Soviet Union. Furthermore, recent geopolitical tension adds substantially to the significance of "noneconomic" considerations. Some publications of the current decade elaborate on the issue both with respect to specific industries (24) and in general. In particular, Daron Acemoglu and James Robinson (25) believe that "sound economic policy" has to be based on a careful analysis of the political economy.
Our study is based on an analysis of data provided by the International Trade Center (ITC), the Russian United Shipbuilding Corporation, independent producers, design companies, and the Ministry of Industry and Trade of the Russian Federation. In order to assess adequately Russian positions in the global shipbuilding market, one should consider two preliminary, largely technical comments. On the one hand, several major quantitative indicators that are typically used for that purpose may give discrepant results. There are obvious differences in measuring between and within volume terms vis-a-vis value terms. Calculations of the number of vessels built or ordered in contrast to gross tonnage of the same vessels and the total value of vessels being built in contrast to the total value of vessels being ordered tend to vary when applied to the current international rankings and to short-run and medium-run dynamics. On the other hand, a substantial number of components of commercial information, including the prices of export contracts, are confidential. In this case, one frequently has to rely on the estimates of various individual and institutional experts, rather than on official statistical data. In addition, the global "list of importers" for shipbuilding products presented by the ITC includes destinations such as Liberia, the Marshall Islands, and the Cayman Islands for obvious reasons, namely their flag of registration and tax considerations. Nevertheless, in a relatively large number of instances, the internationally recognized statistics unfortunately do not allow identification of the true ultimate buyers of the vessels.
3. The Russian Shipbuilding Industry from the National Economic Perspective
Russian shipbuilding has deep historical traditions. It was Peter the Great who, at the turn of the 17th and 18th centuries, strove to provide Russia with free access to maritime routes, thereby giving birth to the industry. Since then, the Russian shipbuilding industry was perceived by most of the Russian tsars to be a strategic sector of the economy and one of the key pillars of national security and economic prosperity. This attitude remained unchanged in the Soviet period. The USSR did its utmost to achieve a position of international leadership in manufacturing of both civilian and military vessels. The Soviet Union accounted for one-third of global military shipbuilding and was among the top ten countries in terms of production of civilian ships. (26)
After the disintegration of the USSR, the industry, along with the entire national economy, experienced a severe crisis. In 1995, fewer than 10 percent of all vessels ordered in the country were manufactured by domestic companies. (27) The situation began to improve only in 2007, although it is still relatively unstable.
As to organizational solutions for the industry, the cluster approach appears to be the most relevant for the following reasons. First, shipbuilding is characterized by strong technological cooperation among enterprises. It is this type of cooperation that typically constitutes the core of any industrial clustering. Second, despite significant state regulation of the industry, interaction among its enterprises is mainly implemented according to market principles, that is, in line with what is traditionally perceived as a "classical form" of cluster performance. Finally, the majority of modern shipyards are geographically pegged to the regions where the Russian military and civilian shipbuilding have been established. The accumulated experience is also essential, influencing the pattern of contemporary development.
At present, Russian shipbuilding accounts for about 1 percent of national manufacturing and includes 133 industrial enterprises plus 49 research institutes and design bureaus. Together, they employ approximately 170,000 people, that is, 0.2 percent of the total national working population. If those hired by contracting domestic companies are included, the number would increase to more than 700,000 people, that is, 1 percent of the nation's workforce. More than one-third of the above-mentioned business units, including the largest ones, are located in the Northwest Federal District, 15 percent in the Volga Federal District, 14 percent in the Central Federal District, and 13 percent in the Far East Federal District. Beginning in 2016, 16 enterprises located in the Crimea (some of them still under reorganization) are also part of the Russian shipbuilding industry. (28) There is no permanent industrial national champion. In the last several years, several enterprises (the Vyborg shipbuilding plant, "Okskaia sudoverf," the ZelenodoTsk plant) have taken the lead. (29) From the point of view of integrated entities, the "Ob "edinennaia sudostroitel'naia korporatsiia (United Shipbuilding Corporation, OSK) dominates the industry. This corporation has more than 40 shipyards, design bureaus (mostly focusing on military shipbuilding), ship repairing, and machine building enterprises geographically located in various parts of the country, including St. Petersburg and Leningrad province (13 enterprises), Arkhangel'sk province (5 enterprises), Murmansk province (4 enterprises), and Kaliningrad province (3 enterprises). Together, they account for 60 percent of the total national output, providing employment for more than 90,000 people. OSK was established in 2007 as a state-owned company and secures the same status at present, with 100 percent of the shares belonging to "Rosimushchestvo." The product mix consists of civilian vessels and warships. In 2016, according to company data, (30) 14 civilian vessels and 8 warships were built.
In addition to OSK, some other holdings exist as well, namely Far East Center of shipbuilding and ship repairing (administratively a part of "Rosneft"), "Ak Bars" from Tatarstan (currently consolidating several regional enterprises with the goal of increasing its output nearly threefold by 2025), (31) and Universal Cargo Logistics Holding B.V., which controls "Okskaia sudoverf." However, several large enterprises--"Almaz" and "Pella" in St. Petersburg, "Severnyi reid" in Severodvinsk, "Krasnye barrikady" in Astrakhan, and shipbuilding enterprises in Crimea--remain outside of the existing holdings and work by themselves.
As already mentioned, the strategic significance of the Russian shipbuilding industry to a substantial degee results from the geopolitical status of the Russian Federation and hence from the fact that the respective Russian enterprises and design bureaus deal with civilian and military shipbuilding. In the last several years, the performance of both was influenced by a large and heterogeneous set of factors including an economic slowdown in Russia, geopolitical tension, the volatility of global oil prices, and the RUR exchange rate. Accordingly, the balance between military and civilian shipbuilding experienced substantial fluctuations. Figure 1 depicts the recent available data.
In value terms, Russian military shipbuilding has outperformed civilian shipbuilding from 2013 on. Thus, in 2015, the former accounted for 82 percent of orders received by domestic shipyards (see Figure 2) both because of the relative technological complexity of warships in comparison with civilian vessels and because of the expansion of government procurement. The dominance of military shipbuilding will most probably continue in the nearest future.
Considering the industry's strategic significance, the existence of programs providing state support--in addition to government procurement of warships--to the domestic producers of civilian vessels should come as no surprise. In particular, within the framework of the program entitled "Development of Shipbuilding Industry and Maritime Facilities for Extracting Operations at Sea Shelves and Sea Transportation of Hydrocarbon Material in 20132030," in 2016,14.5 bln. RUR was allocated to increase production and enhance competitiveness. Out of this total sum, 5.5 bln. RUR was allocated for R&D, and 8.1 bln. RUR for state support of the enterprises. Another program entitled "Development of Civil Maritime Facilities in 2009-2016" was completed with 62 implemented state contracts for a total sum of 3.1 bln. RUR. (32)
It could be argued that the aforementioned measures generated discrepant results. On the one hand, the establishment of OSK helped to stop the crisis in the shipbuilding industry and initiated several investment projects aimed at creating modern shipyards. On the other hand, this huge state corporation gained an almost monopolistic position in some basic segments of the market. Lack of proper competition resulted in a deterioration in the quality of the products, including those designated for export in the military sphere. More over, the efficiency of corporate management in the OSK is a subject of criticism from independent experts and government officials. (33)
4. Russia as a Participant of the Global Shipbuilding Market
Currently, the global civilian shipbuilding market is clearly dominated by producers from East Asia. Table 1 provides a clear illustration of this trend with respect to the gross tonnage of the vessels built.
Meanwhile, the situation looks different in terms of orders. China takes the lead, being substantially ahead of the Republic of Korea
(South Korea) (see Figure 3).
In assessing opportunities and threats for national participants of the global civil shipbuilding market, one has to consider the relatively high diversity of its product mix. Figure 4 provides the information for 2017 that is, in fact, quite similar to the previous years. Accordingly, different countries have good chances to find their niches for profound specialization.
In contrast to the civilian shipbuilding, the production of warships in terms of its geographical composition is more diverse. At least 11 countries (including Russia) are significant players in the global market of these products (see Figure 5).
With respect to international trade, ITC statistics provide the aggregate data on export and import of civilian vessels and warships in value terms. Since 2005, the top three global exporters have been the Republic of Korea (South Korea), China, and Japan (see Figure 6).
Their dominance has been first and foremost predefined by the previously discussed leadership of the same countries in the production of the goods under review. Under the circumstances, it could reasonably be argued that the situation most probably will not change dramatically in the next several years.
Meanwhile, the above-mentioned logic of profound specialization provides various national economies (including the relatively small ones) with opportunities to obtain control over the sizable shares of the overall export in individual segments. In 2013-17, Poland accounted for 21 percent of the global export of HS4 group 8902, which is composed of fishing vessels, factory ships, and other vessels for processing or preserving fishery products. For the same period, the share of Saudi Arabia in the export of HS4 group 8904 (tugs and pusher craft) equaled a remarkable 32 percent. Finally, in the export of HS4 group 8905 (light vessels, fire-floats, dredgers, floating cranes) Congo and Cote d'Ivoire accounted for 7 percent of the global export in 2013 and for nearly 10 percent in 2017. (37) The geographical composition of the leading importers in contrast to that of leading exporters is less stable and demonstrates much less concentration of market power (see Table 2). Indeed, during the entire period of observation, the share of the top three exporters has fluctuated within a range of 45-64 percent, whereas that of the top three importers has been 23-33 percent. It might be suggested that two substantially different motives exist that predefine large-scale decisions to buy vessels, namely the flag of registration/tax considerations and willingness to modernize/expand the domestic fleet. The former results in the fact that Liberia was in the list for 11 years and the Marshall Islands for 10 out of the 12 years under review. The latter could explain the initial German presence for 7 years and then the Indian presence in the last 5 years.
In terms of shipbuilding products taken as a whole, Russia has a relatively minor role both as exporter and importer. In the 21st century, the country accounted for less than 2 percent, on average, of global imports. In the last several years this share started to increase. For the period of 2013-17, it equals 2.7 percent, on average, securing the position of Russia among the top ten leading importers.
In the case of export, the indicator fluctuated within a range of 0.5-1.5 percent of global transactions. Moreover, the analysis reveals one remarkable negative trend. From being a shipbuilding net exporter, Russia has gradually become a net importer of these products. Even during the early 2000s, which was the industry's most difficult period, the country managed to keep a trade surplus, which in 2014 turned into a gradually expanding deficit (see Figure 7). In 2017, this deficit was 1.6 times larger than the total Russian export. This happened despite the sanctions introduced in 2014. The situation might be interpreted as yet another convincing argument in favor of further reforms in Russian shipbuilding.
As previously mentioned, the shipbuilding market is relatively diverse in terms of its product mix. Accordingly, some countries could be active and successful in the production and export of specific types of products. This observation appears to be quite relevant in the Russian case. In particular, with respect to several product groups, Russia was among the global leaders in certain years of the last decade. Table 3 on p. 108 provides a clear illustration of this case.
It could be argued that at least in the first three of these shipbuilding subsectors, Russia might have the chance not only to secure but also to promote national positions in international trade. As for the last product group--vessels and other floating structures for breaking up--the age structure of the Russian fleet (if supported by its large-scale modernization) may also provide certain export opportunities both in the short and in the medium run.
An analysis of the geographical composition of Russian shipbuilding exports reveals that domestic companies (like many of their international competitors) frequently export deliveries directly to countries with liberal tax regimes. This could be motivated either by their own tax-planning considerations or by their clients' requirements. Regardless of the reasons, official statistics show that a small number of tax havens account for a remarkably large share of Russian products imported in relation to total national export (see Table 4, p. 109).
Table 4 demonstrates that various offshore jurisdictions are used as export destinations mainly for civilian shipbuilding. Meanwhile, the Marshall Islands, which for the past five years has been the number one global importer of vessels, is still a kind of terra incognita for Russian manufacturers.
In assessing the major factors influencing the development of Russian shipbuilding, one should pay attention to "noneconomic" considerations that in certain instances have had a significant role. Certainly, the disintegration of the Soviet Union and the resulting economic crisis of 1992-98--with all the direct and indirect negative repercussions for the industry under review--cannot be adequately understood outside of the political and geopolitical contexts. This same trend has continued in the new millennium.
Russia's shipbuilding trade with Ukraine provides an illustrative example. In particular, in 1999, Boris Yeltsin gave substantial preference to Ukrainian producers at the expense of Russian ones, aiming to promote political relations with Ukraine de facto. (39) It was not by chance that in the brief period 2000-04, the tonnage of vessels built in Ukraine increased 3.5 times. (40) Against this background, Ukraine managed to gain a position among the leading exporters to Russia. For the period 2012-14, imports from Ukraine accounted for 10.2 percent of total Russian HS2 group 89, which is composed of ships, boats, and floating structures. The crisis in Russia-Ukraine relations was accompanied by (or rather resulted in) a substantial contraction of these trade flows in both absolute and relative terms. In 2015-17, the Ukrainian share was 3.1 percent. However, the downside is that Russian shipbuilders, who in 2013 accounted for 13 percent of Ukraine's total import, basically lost this market, with a share of less than 0.2 percent in 2014-17. (41)
From a broader perspective, one could argue that at present, Western sanctions (at least in the short run) create barriers for both state-owned and private Russian shipbuilding companies, hampering their access to external financial and innovation (in particular, restrictions on dual-use technologies) resources. In the longer run, sanctions may end up not having such a straightforward negative impact. International experience offers considerable evidence--and the Russian case seems to be among the most convincing--that "external pressure" encourages political and social cohesion and a concentration of resources available domestically and/or from third-party trading partners (42) in order to meet strategic priorities. As we have seen, for the Russian Federation shipbuilding is one such priority.
Despite the fact that in some years of the early 21st century Russia was among the leading global exporters of certain types of shipbuilding products, in general, the country's position in international trade is far from stable and secure. Moreover, with respect to a variety of product groups, Russian exporters tend to lose. It might be reasonably argued that the chance of domestic producers being able to compete successfully with their Asian counterparts in the submarkets of large-scale series vessels is close to zero.
Accordingly, in the Russian case, from the foreign trade point of view, profound specialization with a focus on relatively narrow niches of high-tech specialized vessels (scientific vessels, warships, offshore facilities, supply vessels, and icebreakers) appears to be a quite rational strategy, if not the only possible one. However, in order to succeed, the strategy has to become (a) the subject of a true consensus among all stakeholders, the manufacturers, and the national state; and (b) a real top priority for the industry under review. At least with respect to being a "top priority," we have serious doubts.
Considering the active and intensive involvement of the Russian state in national economic performance both as a regulator and as a direct participant, its preferences and interests in shipbuilding can be described as complex and, in part, controversial. In particular, an apparent trade-off exists between prioritizing profound specialization and a policy aiming at the "across-the-board" expansion of the entire industry. A deliberate choice in favor of the latter with the goal of focusing on domestic production for the internal market could be (in addition to other points) justified by the geopolitical considerations discussed above, Russia's Arctic Strategy, the need to modernize the national fishing fleet, and so on. The authors of the present study, in contrast to some observers, (43) have serious doubts that in the nearest future, an export orientation of Russian shipbuilding with a focus on the high-tech niches of specialized civilian vessels and warships can substantially contribute to the steady and robust growth of the industry.
6. Concluding Remarks
Our work on the present article has led us to three major conclusions. Although the first two might seem trivial, we find them significant.
First, the general performance of Russian shipbuilding and its foreign trade component merits serious interest from academic economists.
Second, in relation to the issue under review, the number of questions exceeds that of answers. This gap will increase in any foreseeable future.
Third, the aforementioned gap indicates some possible directions for further research. With respect to trade statistics, a more profound type of calculation based on HS6 classification in contrast to the HS4 classification we used in this article would be needed to make more defensible generalizations concerning the prospects of Russian shipbuilding export. A comprehensive analysis of the specific elements in the existing programs and those under elaboration could reveal (a) their compatibility with each other and internal consistency; (b) the type of internationalization strategy (if any) that the programs tend to fit. Finally, it might be interesting to investigate the extent to which the Russian shipbuilding trade is different from (a) Russian trade in other engineering products; and (b) the shipbuilding trade in other countries.
St. Petersburg State University
7/9 Universitetskaya emb.
199034, St. Petersburg, Russia
St. Petersburg State University
7/9 Universitetskaya emb.
199034, St. Petersburg, Russia
(1) This article was written within the framework of RFBR research project No. 1702-00688 "Transformation of Russian Foreign Economic Policy in a Changing Geopolitics."
(2) George Friedman, "Putin's Russia," 19 March 2018, https://geopoliticalfutures.com/ putins-russia/.
(3) Sebastiano Brusco, "The Emilian Model: Productive Decentralization and Social Integration," Cambridge Journal of Economics 6, no. 2 (1982): 167-84.
(4) Paul Krugman, and Antony J. Venables, "Integration and the Competitiveness of the Peripheral Industry," in Unity with Diversity in the European Economy, ed. Christopher Bliss and Jorge Brada de Macedo (Cambridge: Cambridge University Press/CEPR, 1990), 55-77.
(5) Michael Porter, The Competitive Advantage of Nations (New York: The Free Press, 1990).
(6) Joseph Cortright, Making Sense of Clusters: Regional Competitiveness and Economic Development (Washington, DC: The Brookings Institution, 2006).
(7) Michael Porter, "Location, Competition, and Economic Development: Local Clusters in Global Economy," Economic Development Quarterly 14, no. 1 (2000): 16.
(8) Michael Storper, The Regional World (New York: Guilford Press, 1997).
(9) Theo J. A. Roelandt and Pim den Hertog, "Cluster Analysis and Cluster-based Policy Making in OECD Countries: An Introduction and Theme," in Boosting Innovation: The Cluster Approach (Paris: OECD Publications, 1999), 9-23.
(10) Michael J. Enright, "The Globalization of Competition and the Localization of Competitive Advantage: Policies Toward Regional Clustering," in The Globalization of Multinational Enterprise Activity and Economic Development, ed. Neil Hood and Stephen Young (London: Macmillan, 2000), 303-31.
(11) Ann Markusen, "Sticky Places in a Slippery Space: A Typology of Industrial Districts," Economic Geography 72, no. 3 (1996): 293-313.
(12) David Doloreux, "What is a Maritime Cluster?/' Marine Policy 83 (2017): 215-20.
(13) Wei Zhang and Siu Lee Lam, "An Empirical Analysis of Maritime Cluster Evolution from the Port Development Perspective--Cases of London and Hong Kong," Transportation Research Part A: Policy and Practice 105 (2017): 219-32.
(14) Ioannis G. Koliousis, Stratos Papadimitriou, Elena Riza, Peter J. Stavroulakis, and Vangelis Tsioumas, "Scarcity Theory and Maritime Clusters: From Paradox to Modelling," Marine Policy 93 (2018): 40M6.
(15) David Doloreux and Richard Shearmur, "Maritime Clusters in Diverse Regional Contexts: The Case of Canada," Marine Policy 33, no. 3 (2009): 520-27.
(16) See, for example, Richard E. Baldwin and Antony Venables, "Spiders and Snakes: Offshoring and Agglomeration in the Global Economy," Journal of International Economics 90, no. 2 (2013): 245-54; Paul Krugman, "Scale Economies, Product Differentiation and Pattern of Trade," American Economic Review 70, no. 5 (1980): 950-59.
(17) See, for example, Yoshinori Shiozawa, "A New Construction of Ricardian Trade Theory: A Many-country, Many-commodity with Intermediate Goods and Choice of Techniques," Evolutionary and Institutional Economics Review 3, no. 2 (2007): 141-87.
(18) Elhanan Helpman and Paul Krugman, Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy (Cambridge, MA: MIT Press, 1985).
(19) Michael E. Porter, "What Is Strategy?," Harvard Business Review 74, no. 6 (1996): 61-78.
(20) Mats Forsgren, "A Note on the Revisited Uppsala Internationalization Process Model--The Implications of Business Networks and Entrepreneurship," Journal of International Business Studies 47 (2016): 1135-44. doi: 10.1057/s41267-016-0014-3.
(21) Jan Johanson and Jan-Erik Vahlne, "The Uppsala Internationalization Process Model Revised: From Liability of Foreignness to Liability of Outsidership," Journal of International Business Studies 40, no. 9 (2009): 1411-31.
(22) Jean-Francois Hennart, "The Accidental Internationalists: A Theory of Bom Globals," Entrepreneurship Theory and Practice 38, no. 1 (2014): 117-35.
(23) See, for example, Pekka Sutela, The Political Economy of Putin's Russia (London: Routledge, 2013); and Neil Robinson, The Political Economy of Russia (Lanham, MD: Rowman & Littlefield, 2012).
(24) Leonid Kosals, Alexei Izyumov, and Bruce Kemelgor, "From the Plan to the Market and Back: The Organisational Transformation of the Russian Defense Industry," Europe-Asia Studies 70, no. 9 (2018): 1450-71.
(25) Daron Acemoglu and James A. Robinson, "Economics versus Politics: Pitfalls of Policy Advice," Journal of Economic Perspectives TJ, no. 2 (2013): 173-92.
(26) "OSK konsolodiruet aktivy," Finans, 19 March 2009, https://web.archive.org/web/ 20110909045540/http://www.finansmag.ru/news/8140.
(27) Alexander Sitnikov, "Kak rossiiskie korabli na mel' seli," Svobodnaia pressa, 16 August 2016, http://svpressa.rU/economy/article/154519/?from=sm24.
(28) Report "O tseliakh i zadachakh Minpromtorga Rossii na 2017 god i osnovnykh rezul'tatakh deiatel'nosti za 2016 god," 77-82, http://minpromtorg.gov.ru/common/upload/files/Minpromtorg_blok_15.03_final_for_web.pdf.
(29) Egor Popov, "Sudostroenie ushlo v glukhuiu oboronu," Kommersant, 1 March 2016, https://www.kommersant.ru/doc/2927174.
(30) United Shipbuilding Corporation, official website, http://www.aoosk.ru/en/products/ military/, http://www.aoosk.ru/en/products/civil/, accessed 25 January 2018.
(31) "Holding 'Ak Bars' sozdaet sudostroitel'nuiu korporatsiiu," Kommersant, 13 February 2018, https://www.kommersant.ru/doc/3548051.
(32) "O tseliakh i zadachakh Minpromtorga Rossii na 2017 god i osnovnykh rezul'tatakh deiatel'nosti za 2016."
(33) INFOLine, "Sudostroitel'naia promyshlennost' Rossii: Tendentsii 2017 goda. Prognoz do 2020 goda," http://www.mashpoital.ru/Portals/0/Research/Demo_Sudosroenie_201 7_rasshir.pdf.
(34) Statista database, available at https://www.statista.com/statistics/263895/shipbuilding-nations-worldwide-by-cgt/, accessed 20 March 2018.
(35) Sudostroenie.info, "Rynok mirovogo sudostroeniia v 2017 godu: Ob'em i struktura zakazov," http://sudostroenie.info/analitika/91 .html, accessed 10 May 2018.
(36) International Trade Center statistics. Trade Map, available from https://www.trademap.org, accessed 17 December 2018.
(37) Authors' calculations based on International Trade Center statistics.
(38) In order to make Table 3 concise, we excluded a substantial amount of data and focused on those with the highest magnitudes.
(39) In de jure terms, it was Ukrainian law N[degrees]1242- XIV1, adopted on 18 November 1999, that introduced a set of measures offering state support to domestic shipbuilding companies. Meanwhile, the anticipated expansion of Ukrainian export to Russia allowed the necessary informal approval of this policy by Russia.
(40) Sitnikov, "Kak rossiiskie korabli na mel' seli."
(41) Authors' calculations based on the International Trade Center statistics.
(42) Sometimes they are referred as "white knights." See, for example, Gary C. Hufbauer and Jeffrey J. Schott, "Economic Sanctions and U.S. Foreign Policy," PS: Political Science & Politics 18, no. 4 (1985): 727-35.
(43) Some existing data on domestic production and Russian export of civilian vessels (Alexander Butov, Rynok produktsii sudostroeniia [Moscow: National Research University-Higher School of Economics, 2018], 56) in 2013-17 reveal that the former exceeded the latter only once, which was in 2014. On the basis of the statistics, it could probably be suggested that the overall results of Russian shipbuilding depend totally on export performance.
Caption: Figure 7. Russian shipbuilding export and import.
Table 1. The largest civil shipbuilding countries/regions in 2016. Ship size coverage: 100 gross tonnage and higher Country/region Completions in Completions of thousand gross total volume (%) tonnages Republic of Korea 25,035 37.69 (South Korea) China 22,355 33.66 Japan 13,309 20.04 Europe 1,537 2.31 Others 4,187 6.30 Total 66,423 100.00 Source: Statista database (34) Table 2. Share of the largest importers in the global shipbuilding import (%). 2005 Liberia 7.9 2006 Germany 13.4 Spain 7.8 Liberia 8.0 Germany 7.1 Spain 7.0 2008 Marshall 8.6 2009 Marshall 13.8 Islands Islands Germany 8.5 Liberia 9.8 Liberia 8.0 Germany 7.5 2011 Liberia 13.4 2012 Liberia 9.8 Marshall 10.1 Marshall 8.5 Islands Islands Germany 8.5 India 6.8 2014 Marshall 15.4 2015 Marshall 17.6 Islands Islands Liberia 7.1 India 6.1 India 6.3 Poland 5.6 2007 Liberia 8.3 Marshall 7.1 Islands Germany 5.6 2010 Germany 13.3 Liberia 10.9 Marshall 8.5 Islands 2013 Marshall 10.5 Islands Liberia 7.8 India 7.2 2016 Marshall 18.8 Islands Liberia 7.7 India 6.8 Source: Authors' calculations based on International Trade Center statistics Table 3. Russia's ranks in the global shipbuilding export HS4 2005 2006 2007 2008 2009 2010 2011 code * 8902 5 4 7 7 16 19 7 8904 11 6 8 13 30 7 13 8906 13 8 7 9 20 33 47 8908 1 5 8 11 11 11 21 HS4 2012 2013 2014 2015 2016 2017 Simple code * average 8902 13 13 22 14 8 20 12 8904 5 16 16 6 4 7 11 8906 2 14 15 2 ** 8 15 *** 8908 22 14 12 19 30 23 14 Source: Authors' calculations based on International Trade Center statistics Notes: * HS4 code 8902: fishing vessels, factory ships, and other vessels for processing or preserving fishery products 8904: tugs and pusher craft8906: vessels including warships and lifeboats 8908: vessels and other floating structures for breaking up ** No export deliveries. *** The results of 2016 are excluded. Table 4. Share of selected importers of Russian shipbuilding industry by product groups (%)38 Year Product Importer Share of Russian export % 2001 Fishing vessels, factory Panama 70.6 ships, and other vessels for processing or preserving fishery products 2002 Cruise ships, excursion boats, Liberia 39.4 ferry-boats, cargo ships, barges, and similar vessels Malta 23.5 2003 Fishing vessels, factory Cyprus 28.3 ships, and other vessels for processing or preserving fishery products 2004 Fishing vessels, factory Cyprus 49.2 ships, and other vessels for processing or preserving fishery products Tugs and pusher craft British Virgin 24.2 Islands Vessels and other floating St. Vincent 19.8 structures for breaking up The Grenadines 19.4 2005 Fishing vessels, factory Cyprus 44.0 ships, and other vessels for processing or preserving fishery products 2006 Tugs and pusher craft Cyprus 59.7 2007 Fishing vessels, factory Cyprus 31.2 ships, and other vessels for processing or preserving fishery products 2008 Yachts and other vessels for Malta 46.9 pleasure or sports Vessels and other floating St. Kitts and 38.7 structures for breaking up Nevis Panama 11.2 2010 Cruise ships, excursion Cyprus 28.4 boats, ferry-boats, cargo ships, barges, and similar vessels Yachts and other vessels for British Virgin 14.9 pleasure or sports Islands 2014 Tugs and pusher craft Cyprus 75.2 2015 Light vessels, fire-floats, Belize 28.3 dredgers, and floating cranes 2016 Tugs and pusher craft Cyprus 18.3 Source: Authors' calculations based on International Trade Center statistics Figure 1. Ships built at Russian yards, units (2010-15). Source: Popov, "Sudostroenie ushlo v glukhuiu oboronu." Civil vessels War ships 2010 115 39 2011 95 63 2012 155 87 2013 174 132 2014 120 116 2015 83 99 Note: Table made from bar graph. Figure 2. Ships built at Russian yards, bln. RUR (2010-2015). Source: Popov, "Sudostroenie ushlo v glukhuiu oboronu." Civil War ships vessels 2010 48.4 72.9 2011 22.6 39.8 2012 50.7 74.5 2013 208.9 44.9 2014 105.2 46.1 2015 102.6 22.8 Note: Table made from line graph. Figure 3. The structure of the orders' stock for building civilian vessels by country (2017). Source: Rynok mirovogo sudostroeniia (35) Europe, others than EU-27 1% EU-27 7% Japan 21% Republic of Korea 25% China 39% Others 7% Note: Table made from pie chart. Figure 4. The structure of the orders' stock for civilian shipbuilding by vessel type (2017). Source: "Rynok mirovogo sudostroeniia." LNG gas Carrier; 0.2% Passenger Cruise Vessel; 24.2% Others; 1.6% Cargo- Passenger Vessel Record; 0.4% Balker; 19.9% Container Vessel; 6.2% tanker 19.9% ore carrier 1.7% carrier of general cargo; 24.4% chemical carrier/ tanker for oil products transportation on; 1.5% Note: Table made from pie chart. Figure 5. Share of individual countries in global warship production (2010-15; %). Source: OSK. Italy 4% Taiwan 4% Germany 4% China 5% Russian Federation 6% Netherlands 7% United Kingdom 7% Turkey 9% Spain 9% France 10% USA 16% Others 19% Note: Table made from pie chart. Figure 6. Share of the largest exporters in the global shipbuilding exort (%). Source: Authors' calculations based on International Trade Center statistics. (36) Korea, China Japan Republic of 2001 19 4 21 2002 19 4 22 2003 18 5 20 2004 19 5 23 2005 16 6 24 2006 15 9 23 2007 15 11 25 2008 13 13 28 2009 15 19 29 2010 15 23 27 2011 14 23 28 2012 14 24 24 2013 10 20 24 2014 9 18 28 2015 8 21 28 2016 10 18 27 2017 9 17 30
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|Author:||Efimova, Elena; Sutyrin, Sergei|
|Publication:||Region: Regional Studies of Russia, Eastern Europe, and Central Asia|
|Date:||Jan 1, 2019|
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